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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-5338862
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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1 HaMada Street
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Herziliya Pituach, Israel
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4673335
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common stock, par value $0.0001 per share
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NASDAQ (Global Select Market)
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☒ Lar
ge accelerated filer
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☐ Accelerated filer
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☐ Non-accelerated filer
(do not check if a
smaller reporting
company)
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☐ Smaller reporting company
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☐ Emerging growth company |
· |
our limited history of profitability, which may not continue in the future;
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· |
our limited operating history, which makes it difficult to predict future results;
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· |
future demand for solar energy solutions;
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· |
changes to net metering policies or the reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar energy applications;
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· |
changes in the U.S. trade environment, including the recent imposition of import tariffs;
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federal, state, and local regulations governing the electric utility industry with respect to solar energy;
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· |
the retail price of electricity derived from the utility grid or alternative energy sources;
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· |
interest rates and supply of capital in the global financial markets in general and in the solar market specifically;
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· |
competition, including introductions of power optimizer, inverter and solar
photovoltaic (“
PV”) system monitoring products by our competitors;
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· |
developments in alternative technologies or improvements in distributed solar energy generation;
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historic cyclicality of the solar industry and periodic downturns;
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defects or performance problems in our products;
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our ability to forecast demand for our products accurately and to match production with demand;
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our dependence on ocean transportation to deliver our products in a cost-effective manner;
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our dependence upon a small number of outside contract manufacturers and suppliers;
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capacity constraints, delivery schedules, manufacturing yields, and costs of our contract manufacturers and availability of components;
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delays, disruptions, and quality control problems in manufacturing;
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shortages, delays, price changes, or cessation of operations or production affecting our suppliers of key components;
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business practices and regulatory compliance of our raw material suppliers;
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performance of distributors and large installers in selling our products;
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· |
our customer's financial stability, creditworthiness, and debt leverage ratio;
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our ability to retain key personnel and attract additional qualified personnel;
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our ability to effectively design, launch, market, and sell new generations of our products and services;
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our ability to maintain our brand and to protect and defend our intellectual property;
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our ability to retain, and events affecting, our major customers;
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our ability to manage effectively the growth of our organization and expansion into new markets;
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our ability to integrate acquired businesses;
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fluctuations in global currency exchange rates;
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unrest, terrorism, or armed conflict in Israel;
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general economic conditions in our domestic and international markets;
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consolidation in the solar industry among our customers and distributors; and
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• |
Module mismatch.
Traditional inverter systems are unable to consistently produce maximum energy from PV modules. Each PV module in a system has a unique power production profile driven by differences in manufacturing and installation parameters. The architecture of traditional inverter systems does not allow each PV module to operate at its unique MPP. When PV modules are wired in series in a traditional inverter architecture, the entire string’s output is reduced, sometimes correlated directly to the output of the lowest‑performing PV module on the string. Output reduction can result from subtle variations in PV module composition, atmospheric conditions, soiling, individual PV module locations and orientations, or varying levels of PV module degradation over time.
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• |
Partial shading.
Many real‑world factors can cause a subset of the PV modules in a system to be partially shaded, which can significantly affect the power output of the entire string. For instance, electric wires, a chimney or even adjacent solar panels may cast a shadow during particular hours of the day, or debris may accumulate. This partial shading reduces the yield of a traditional solar PV system by decreasing, or in extreme cases eliminating, power output from the shaded modules. Overall losses to system production from such partial shading can range from small to substantial.
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• |
Dynamic maximum power point tracking loss.
The MPP of a PV module shifts constantly throughout the day as a result of atmospheric conditions. A traditional inverter system’s inability to coordinate output on a module‑by‑module basis makes it difficult for the system to respond dynamically to the shifting MPP. This inability to respond to the shifting MPP can reduce the potential power output of a traditional solar PV system by 3‑10%.
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• |
Rooftop system design complexities.
A traditional inverter system requires each string to be of the same length, use the same type of PV modules and be positioned at the same angle toward the sun. Consequently, rooftop asymmetries and obstructions result in either wasted roof space or inefficient duplication of system components.
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Safety hazards.
Traditional inverter systems cannot shut down the DC output voltage at the PV module level. The DC cables from these modules carry high voltages as long as the sun is shining, even when the traditional inverter or the grid connection has been shut down. This poses serious risks to installers, fire fighters and anyone else who performs work on or around the installation. Such safety hazards have recently prompted heightened safety installation and operation procedures and regulations in a growing number of geographies, compliance with which increases the cost of traditional PV systems.
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• |
No module level monitoring.
A traditional inverter system cannot track power output, temperature or any other attribute of a single PV module. Consequently, a system operator cannot perform remote diagnostics, track performance of PV system components or receive alerts about individual PV module status, and may be unaware of specific module‑level problems or breakdowns.
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• |
Higher initial cost per watt and limited economies of scale.
Microinverters perform all the functionality of the traditional inverter, but at each PV module, and consequently a microinverter system has a higher initial upfront cost of components relative to traditional inverter architecture. In addition, as every PV module must have its own microinverter, the cost per watt of a microinverter system does not decrease with scale. As such, microinverters are generally more expensive than traditional inverter systems on a cost per watt basis for residential installations and not economically viable relative to traditional inverter systems for large commercial and utility installations.
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• |
Grid Code Compliance.
With the growing penetration of solar energy, many utilities in individual U.S. states and Europe have adopted new sets of grid codes to preserve the stability of the electric grid. These grid codes require solar PV inverters to respond dynamically to variances in grid‑wide voltage, which typically requires inverter hardware and software to be reengineered. In most cases, adaptation to these new grid codes would require added costs and complexities, limiting the ability of microinverters to address some markets.
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• |
Maximized PV module power output.
Our power optimizers provide module‑level MPP tracking and real‑time adjustments of current and voltage to the optimal working point of each individual PV module. This enables each PV module to continuously produce its maximum power potential independent of other modules in the same string, thus minimizing module mismatch and partial shading losses. By performing these adjustments at a very high rate, our power optimizers also solve the dynamic MPP losses associated with traditional inverters. Independent testing from Photon Laboratories as well as tests performed by PV Evolution Labs according to the National Renewable Energy Laboratory shade test have confirmed that our technology provides power harvesting that is superior to traditional inverter systems.
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• |
Optimized architecture with economies of scale.
Our system shifts certain functions of the traditional inverter to our power optimizers while keeping the DC to AC function and grid interaction in our inverter. As a result, our inverter is smaller, more efficient, more reliable and less expensive than inverters used in traditional inverter systems. The cost savings that we have achieved on the inverter enable our system to be priced at a cost per watt that is comparable with traditional inverter systems of leading manufacturers. As a PV system grows in size, our inverter benefits from economies of scale, making our technology viable for large commercial and utility‑scale applications.
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• |
Enhanced system design flexibility.
Unlike a traditional inverter system that requires each string to be the same length, use the same type of PV modules and be positioned at the same angle toward the sun, our system allows significant design flexibility by enabling the installer to place PV modules in uneven string lengths and on multiple roof facets. This design flexibility:
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• |
increases the amount of the available roof that can be utilized for power production. Unlike traditional inverter systems, our system does not require each string to be the same length, use the same type of PV modules or be positioned at the same angle toward the sun. As a result, our system is significantly less prone to wasted roof space resulting from rooftop asymmetries and obstructions.
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reduces the number of field change orders. For example, some installers use remote tools to estimate the size and configuration of an installation in connection with the customer acquisition process. This is especially common for high‑volume residential arrays, where an exhaustive survey of rooftop obstructions would be uneconomical. In some cases, installers discover that their preliminary design, based on remote tools, cannot be implemented due to unexpected shading or other obstructions. With traditional inverter system designs, an obstructed module may require a significant system redesign and a modification of the customer contract to take into account the changed system design. Our DC optimized inverter solution enables an installer to compensate or adjust for most obstructions without materially changing the original design or requiring a modification to the customer contract.
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Reduced balance of system costs.
Our DC optimized inverter system allows significantly longer strings to be connected to the same inverter (as compared to a traditional inverter system). This minimizes the cost of cabling, fuse boxes and other ancillary electric components. These factors together result in easier installation with shorter design times and a lower initial cost per watt, while enabling larger installations per rooftop.
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• |
Continuous monitoring and control to reduce operation and maintenance costs.
Our cloud‑based monitoring platform provides full data visibility at the module level, string level, inverter level and system level. The data can be accessed remotely by any web‑enabled device, allowing comprehensive analysis, immediate fault detection and alerts. These monitoring features reduce O&M costs for the system owner by identifying and locating faults, enabling remote testing and reducing field visits.
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• |
Enhanced safety.
We have incorporated module‑level safety mechanisms in our system to protect installers, electricians and firefighters. Each power optimizer is configured to reduce output to 1 volt unless the power optimizer receives a fail‑safe signal from a functioning inverter. As a result, if the inverter is shut down (e.g., for system maintenance, due to malfunction, in the event of a fire or otherwise), the DC voltage throughout the system is reduced to a safe level. In recent years, new safety standards have been introduced in the U.S. and in Europe that require or encourage the installation of safety measures such as these. Our DC optimized inverters comply with the applicable safety requirements of the areas in which they are sold, providing incremental cost savings to installers by eliminating the need for additional hardware such as DC breakers, switches or fire‑proof ducts required by traditional inverter systems.
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High reliability.
Solar PV systems are typically expected to operate for at least 25 years under harsh outdoor conditions. High reliability is critical and is facilitated by systems and components that have low heat generation, solid and stable materials, and an absence of moving parts. We have designed our system to meet these stringent requirements. Our power optimizers dissipate much less heat than microinverters because no DC‑AC inversion occurs at the module level. As a result, less heat is dissipated beneath the PV module, which improves lifetime expectancy and reliability of our power optimizers. Our power optimizers’ high switching frequency allows the use of ceramic capacitors with a low, fixed rate of aging and a proven life expectancy in excess of 25 years. Further, we use automotive‑grade application specific integrated circuits (“ASICs”) that embed many of the required electronics into the ASIC. This reduces the number of components and consequently the potential points of failure.
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• |
product and system performance and features;
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• |
total cost of ownership;
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• |
PV module compatibility and interoperability;
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• |
reliability and duration of product warranty;
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• |
customer service and support;
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• |
breadth of product line;
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• |
local sales and distribution capabilities;
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• |
compliance with applicable certifications and grid codes;
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• |
size and financial stability of operations; and
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• |
size of installed base.
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•
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cost competitiveness, reliability and performance of solar PV systems compared to conventional and non-solar renewable energy sources and products;
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•
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availability and amount of government subsidies and incentives to support the development and deployment of solar energy solutions;
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•
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the extent to which the electric power industry and broader energy industries are deregulated to permit broader adoption of solar electricity generation;
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•
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prices of traditional carbon-based energy sources;
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•
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levels of investment by end-users of solar energy products, which tend to decrease when economic growth slows; and
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•
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construction of a significant number of new power generation plants, including plants utilizing natural gas, nuclear, coal, renewable energy, or other generation technologies;
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•
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relief of transmission constraints that enable local centers to generate energy less expensively;
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•
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reductions in the price of natural gas;
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•
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utility rate adjustment and customer class cost reallocation;
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•
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energy conservation technologies and public initiatives to reduce electricity consumption;
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•
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development of smart-grid technologies that lower the peak energy requirements of a utility generation facility;
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development of new or lower-cost energy storage technologies that have the ability to reduce a customer’s average cost of electricity by shifting load to off-peak times; and
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•
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development of new energy generation technologies that provide less expensive energy.
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· |
the addition or loss of significant customers;
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· |
changes in laws or regulations applicable to our industry, products or services;
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speculation about our business in the press or the investment community;
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· |
price and volume fluctuations in the overall stock market;
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volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable;
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share price and volume fluctuations attributable to inconsistent trading levels of our shares;
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our ability to protect our intellectual property and other proprietary rights;
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sales of our common stock by us or our significant stockholders, officers and directors;
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the expiration of contractual lock-up agreements;
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· |
the development and sustainability of an active trading market for our common stock;
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· |
success of competitive products or services;
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· |
the public’s response to press releases or other public announcements by us or others, including our filings with the Securities and Exchange Commission (the “SEC”), announcements relating to litigation or significant changes to our key personnel;
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· |
the effectiveness of our internal controls over financial reporting;
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· |
changes in our capital structure, such as future issuances of debt or equity securities;
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our entry into new markets;
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tax developments in the U.S., Europe, or other markets;
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strategic actions by us or our competitors, such as acquisitions or restructurings; and
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changes in accounting principles.
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· |
authorizing “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt;
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providing for a classified board of directors with staggered, three-year terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;
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not providing for cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
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limiting the ability of stockholders to call a special stockholder meeting;
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prohibiting stockholders from acting by written consent;
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· |
establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings;
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· |
the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66
2
/
3
% in voting power of all the then-outstanding shares of common stock of the Company entitled to vote thereon, voting together as a single class;
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· |
providing that our board of directors is expressly authorized to amend, alter, rescind or repeal our by-laws; and
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· |
requiring the affirmative vote of holders of at least 66
2
/
3
% of the voting power of all of the then outstanding shares of common stock, voting as a single class, to amend provisions of our certificate of incorporation relating to the management of our business, our board of directors, stockholder action by written consent, advance notification of stockholder nominations and proposals, calling special meetings of stockholders, forum selection and the liability of our directors, or to amend, alter, rescind, or repeal our by-laws.
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Fiscal Year Ended
June 30,
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Six Months Ended December 31,
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Fiscal Year Ended
December 31,
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||||||||||||||||||||||
2014
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2015
|
2016
|
2016
|
2017
|
2018
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Consolidated Statements of Operations Data:
|
||||||||||||||||||||||||
Revenues
|
$
|
133,217
|
$
|
325,078
|
$
|
489,843
|
$
|
239,997
|
$
|
607,045
|
$
|
937,237
|
||||||||||||
Cost of revenues
|
111,246
|
243,295
|
337,887
|
159,097
|
392,279
|
618,001
|
||||||||||||||||||
Gross profit
|
21,971
|
81,783
|
151,956
|
80,900
|
214,766
|
319,236
|
||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||
Research and development, net
|
18,256
|
22,018
|
33,231
|
20,279
|
54,966
|
82,245
|
||||||||||||||||||
Sales and marketing
|
17,792
|
24,973
|
34,833
|
20,444
|
50,032
|
68,307
|
||||||||||||||||||
General and administrative
|
4,294
|
6,535
|
12,133
|
6,790
|
18,682
|
29,264
|
||||||||||||||||||
Total operating expenses
|
40,342
|
53,526
|
80,197
|
47,513
|
123,680
|
179,816
|
||||||||||||||||||
Operating income (loss)
|
(18,371
|
)
|
28,257
|
71,759
|
33,387
|
91,086
|
139,420
|
|||||||||||||||||
Financial income (expenses)
|
(2,787
|
)
|
(5,077
|
)
|
471
|
(2,789
|
)
|
9,158
|
(2,297
|
)
|
||||||||||||||
Other expenses
|
—
|
104
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Income (loss) before taxes on income
|
(21,158
|
)
|
23,076
|
72,230
|
30,598
|
100,244
|
137,123
|
|||||||||||||||||
Taxes on income (tax benefit)
|
220
|
1,955
|
(4,379
|
)
|
5,217
|
16,072
|
9,077
|
|||||||||||||||||
Net income (loss)
|
$
|
(21,378
|
)
|
$
|
21,121
|
$
|
76,609
|
$
|
25,381
|
$
|
84,172
|
$
|
128,046
|
|||||||||||
Net loss attributable to Non-controlling interests
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
787
|
||||||||||||
Net income attributable to SolarEdge Technologies Inc.
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
128,833
|
||||||||||||
Net basic earnings (loss) per share of common stock attributable to SolarEdge Technologies, Inc.
|
$
|
(7.64
|
)
|
$
|
0.30
|
$
|
1.92
|
$
|
0.62
|
$
|
1.99
|
$
|
2.85
|
|||||||||||
Net diluted earnings (loss) per share of common stock attributable to SolarEdge Technologies, Inc.
|
$
|
(7.64
|
)
|
$
|
0.27
|
$
|
1.73
|
$
|
0.58
|
$
|
1.85
|
$
|
2.69
|
|||||||||||
Weighted average number of shares used in computing net basic earnings (loss) per share of common stock
|
2,798,894
|
11,902,911
|
39,987,935
|
41,026,926
|
42,209,238
|
45,235,310
|
||||||||||||||||||
Weighted average number of shares used in computing net diluted earnings (loss) per share of common stock
|
2,798,894
|
15,269,448
|
44,376,075
|
43,839,342
|
45,425,307
|
47,980,002
|
As of June 30,
|
As of December 31, | |||||||||||||||||||||||
2014
|
2015
|
2016
|
2016
|
2017
|
2018
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Consolidated Balance Sheet Data:
|
||||||||||||||||||||||||
Cash and cash equivalents
|
$
|
9,754
|
$
|
144,750
|
$
|
74,032
|
$
|
104,683
|
$
|
163,163
|
$
|
191,633
|
||||||||||||
Available-for-sale marketable securities
|
-
|
-
|
111,609
|
118,727
|
180,384
|
192,936
|
||||||||||||||||||
Total assets
|
74,998
|
305,658
|
397,438
|
424,743
|
641,305
|
964,472
|
||||||||||||||||||
Total debt
|
20,244
|
-
|
-
|
-
|
-
|
20,149
|
||||||||||||||||||
Total stockholders’ equity (deficiency)
|
$
|
(135,294
|
)
|
$
|
166,944
|
$
|
256,108
|
$
|
288,778
|
$
|
397,467
|
$
|
570,726
|
Fiscal Year Ended June 30,
|
Six Months Ended December 31,
|
Fiscal Years Ended
December 31,
|
||||||||||||||
2016
|
2016
|
2017
|
2018
|
|||||||||||||
Inverters shipped
|
223,589
|
120,117
|
317,288
|
455,793
|
||||||||||||
Power optimizers shipped
|
5,738,546
|
2,904,858
|
7,367,921
|
11,351,678
|
||||||||||||
Megawatts shipped(1)
|
1,615
|
880
|
2,461
|
3,919
|
(1) |
Calculated based on the aggregate nameplate capacity of inverters shipped during the applicable period. Nameplate capacity is the maximum rated power output capacity of an inverter as specified by the manufacturer. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Performance Measures”.
|
• |
In 2012, we shipped our millionth power optimizer and increased our sales personnel presence in the U.S. market.
|
• |
In 2013, we introduced our third generation power optimizer, based on our third generation ASIC, with a power rating of up to 700 watts and improved heat dissipation capabilities for high reliability and lower cost.
|
• |
In March 2015, we completed our initial public offering and started to trade on the NASDAQ Global Select Market under the ticker SEDG.
|
• |
In September 2015, we released information about the development of our new HD-Wave inverter technology.
|
• |
In January 2016, we announced the immediate international availability of our StorEdge solution.
|
• |
In February 2016, we shipped our ten millionth power optimizer.
|
• |
In June 2016, we received the Intersolar Award in the Photovoltaics category for our HD-Wave technology inverter and began shipments of our HD-Wave inverter.
|
• |
In May 2017, we unveiled our new S-Series power optimizer, an Intersolar Award Finalist in the Photovoltaics category.
|
• |
In July 2017, we launched the world’s first inverter-integrated electric vehicle (EV) charger, supplementing grid power with PV power.
|
• |
In September 2017, we approved an expansion for our residential offering in Australia with higher production of single-phase inverters and launched a line of three-phase inverters.
|
• |
In September 2017, we released our DC optimized inverter solution in South Korea.
|
• |
In January 2018, we launched together with Omron Corporation, a new DC optimized inverter solution for Japan’s high-voltage PV market.
|
• |
In February 2018, we launched our StorEdge Solution with power backup for European PV markets.
|
• |
In April 2018, we were announced as the Gold Winner of the Edison Awards™ for our HD-Wave inverter technology, in the Renewable Energy Category.
|
• |
In May 2018, we released our new innovative grid services and virtual power plant solution.
|
• |
In May 2018, we entered into the UPS market with the purchase of the assets of Gamatronic.
|
• |
In August 2018, we were awarded the Straus Award in the Cloud Computing category for our grid services and virtual power plant solution.
|
• |
In October 2018, we announced our acquisition of Kokam, a leading provider of lithium-ion cells, batteries and energy storage solutions.
|
Year ended December 31,
|
2017 to 2018
|
|||||||||||||||
2017
|
2018
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Revenues
|
$
|
607,045
|
$
|
937,237
|
$
|
330,192
|
54.4
|
%
|
||||||||
Cost of revenues
|
392,279
|
618,001
|
225,722
|
57.5
|
%
|
|||||||||||
Gross profit
|
214,766
|
319,236
|
104,470
|
48.6
|
%
|
|||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
54,966
|
82,245
|
27,279
|
49.6
|
%
|
|||||||||||
Sales and marketing
|
50,032
|
68,307
|
18,275
|
36.5
|
%
|
|||||||||||
General and administrative
|
18,682
|
29,264
|
10,582
|
56.6
|
%
|
|||||||||||
Total operating expenses
|
123,680
|
179,816
|
56,136
|
45.4
|
%
|
|||||||||||
Operating income
|
91,086
|
139,420
|
48,334
|
53.1
|
%
|
|||||||||||
Financial income (expenses)
|
9,158
|
(2,297
|
)
|
11,455
|
N/A
|
|||||||||||
Income before taxes on income
|
100,244
|
137,123
|
36,879
|
36.8
|
%
|
|||||||||||
Taxes on income
|
16,072
|
9,077
|
(6,995
|
)
|
(43.5
|
)%
|
||||||||||
Net income
|
$
|
84,172
|
$
|
128,046
|
$
|
43,874
|
52.1
|
%
|
||||||||
Net loss attributable to Non-controlling interests
|
-
|
787
|
787
|
N/A
|
||||||||||||
Net income attributable to SolarEdge Technologies Inc.
|
$
|
84,172
|
$
|
128,833
|
$
|
44,661
|
53.1
|
%
|
Year Ended
December 31, |
2017 to 2018 |
|||||||||||||||
2017
|
2018
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Revenues
|
$
|
607,045
|
$
|
937,237
|
$
|
330,192
|
54.4
|
%
|
· |
a change in the mix of products, yielding a higher portion of sales of commercial products that are characterized with lower ASP per Watt in comparison to residential products;
|
· |
we initiated price reductions of our commercial products in order to increase market share in this segment;
|
· |
the introduction of new commercial products with higher capacity which carry a lower ASP per watt; and
|
· |
selective price decreases of our residential products
|
Year Ended
December 31, |
2017 to 2018
|
|||||||||||||||
2017
|
2018
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Cost of revenues
|
$
|
392 ,279
|
$
|
618,001
|
$
|
225,722
|
57.5
|
%
|
||||||||
Gross profit
|
$
|
214,766
|
$
|
319,236
|
$
|
104,470
|
48.6
|
%
|
· |
an increase in the volume of products sold;
|
· |
increased warranty expenses of $35.1 million associated with the rapid increase in our install base;
|
· |
increased shipment and logistical costs of $16.1 million attributed, in part, to the growth in volumes shipped, an increase of customs tariff in the US and an increase in air shipments due to power component shortages;
|
· |
increased fixed and variable costs related to the manufacturing of Kokam related products and the assembly of UPS products in the amount of $14.7 million; and
|
· |
increased personnel-related costs of $13.1 million related to the expansion of our operations and support headcount which is growing in parallel to our growing install base worldwide and as result of the acquisition of our UPS and battery divisions ;
|
· |
increased warranty and support services expenses and accruals;
|
· |
price reduction to customers at a rate higher than our cost reduction;
|
· |
lower gross profit on UPS and battery products due to underutilization of production facilities, as well as
certain transactions for the sale of batteries with low gross profit, which had been entered into prior to closing the Kokam Acquisition
; and
|
· |
amortization of intangible assets and cost of product adjustment related to the UPS assets acquisition and Kokam Acquisition;
|
· |
reductions in per-unit production costs
that exceeded price erosion of our products;
|
· |
increased efficiency in our supply chain; and
|
· |
general economies of scale in our personnel-related costs and other costs associated with our support and operations departments.
|
Year Ended
December 31 |
2017 to 2018
|
|||||||||||||||
2017
|
2018
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Research and development
|
$
|
54,966
|
$
|
82,245
|
$
|
27,279
|
49.6
|
%
|
· |
an increase in personnel-related costs of $21.2 million as a result of an increased headcount of engineers, as well as hiring Gamatronic's employees and the consolidation of Kokam's employees. The increase in headcount reflects our continuing investment in enhancements of existing products as well as development associated with bringing new products to market;
|
· |
depreciation expenses related to lab equipment and amortization expenses related to intangible assets increased by $2.1 million;
|
· |
materials consumption for development increased by $1.5 million, part of it related to Kokam activities;
|
· |
expenses related to other directly related overhead costs that increased by $1.1 million;
|
· |
expenses related to consultants and sub‑contractors that increased by $1.1 million; and
|
· |
Other expenses, including travel expenses increased by $0.3 million.
|
Year Ended
December 31, |
2017 to 2018
|
|||||||||||||||
2017
|
2018
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Sales and marketing
|
$
|
50,032
|
$
|
68,307
|
$
|
18,275
|
36.5
|
%
|
· |
an increase in personnel-related costs of $14.6 million as a result of (i) an increase in headcount supporting our growth in the U.S., Europe
Asia and the rest of the world, (ii) salary
expenses associated with employee equity compensation resulting from the impact of the increase in our stock price affecting the fair value of any share award, and (iii) hiring Gamatronic's employees and the consolidation of Kokam's employees;
|
· |
expenses related to travel increased by $1.0 million;
|
· |
expenses related to trade shows and marketing activities increased by $1.0 million;
|
· |
expenses related to other overhead costs increased by $0.6 million;
|
· |
depreciation expenses related to tangible assets and amortization expenses
related to intangible assets
increased by $0.6 million; and
|
· |
expenses related to consultants and sub‑contractors increased by $0.5 million.
|
Year Ended
December 31, |
2017 to 2018
|
|||||||||||||||
2017
|
2018
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
General and administrative
|
$
|
18,682
|
$
|
29,264
|
$
|
10,582
|
56.6
|
%
|
· |
an increase in personnel-related costs of $5.8 million related to (i) higher headcount in the legal, finance, human resources, and information technology department, functions required of a fast-growing public company, (ii) changes in management compensation and increased expenses related to equity-based compensation resulting from the impact of the increase in our stock price affecting the fair value of any share award and (iii) hiring Gamatronic's employees and the consolidation of Kokam's employees;
|
· |
expenses related to external consultants and sub-contractors increased by $3.9 million due to legal proceedings initiated by us and other consulting expenses in relation to the Gamatronic Acquisition and the Kokam Acquisition;
|
· |
expenses related to other overhead costs increased by $0.6 million;
|
· |
expenses related to travel increased by $0.5 million;
|
· |
increase of $0.4 million in 2018 due to the disposal of fixed assets; and
|
· |
depreciation expenses increased by $0.3 million.
|
Year Ended
December 31, |
2017 to 2018
|
|||||||||||||||
2017
|
2018
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Financial Income (Expenses)
|
$
|
9,158
|
$
|
(2,297
|
)
|
$
|
(11,455
|
)
|
N/A
|
· |
an increase of $13.3 million in foreign exchange fluctuations mostly between the Euro and the New Israeli Shekel against the U.S. Dollar; and
|
· |
an increase of $2.4 million in interest expenses,
mainly related to advance payments received for performance obligations that extend for a period greater than one year, as part of the adoption of Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606).
|
· |
an increase of $2.2 million in interest income and accretion (amortization) of discount (premium) on marketable securities; and
|
· |
a decrease of $2.0 million in costs related to hedging transactions in 2018, as compared to 2017.
|
Year Ended
December 31, |
2017 to 2018
|
|||||||||||||||
2017
|
2018
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Taxes on income
|
$
|
16,072
|
$
|
9,077
|
$
|
(6,995
|
)
|
(43.5
|
)%
|
· |
a one-time transition tax net decrease of $1.3 million in 2018 as compared to an increase of $18.7 million in 2017 on the federal mandatory deemed repatriation of cumulative foreign earnings; and
|
· |
a decrease of $1.6 million in deferred tax assets (presented as tax income).
|
· |
a tax provision of $12.0 million in the year ended December 31, 2018, with respect to Global Intangible Low Taxed Income inclusion;
|
· |
an increase of $1.7 million in other
current tax expenses in the US;
and
|
· |
an increase
of $0.9 million in current tax expenses in all jurisdictions.
|
Year Ended
December 31, |
2017 to 2018
|
|||||||||||||||
2017
|
2018
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Net income
|
$
|
84,172
|
$
|
128,046
|
$
|
43,874
|
52.1
|
%
|
Year ended December 31,
|
2016 to 2017
|
|||||||||||||||
2016
(unaudited)
|
2017
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Revenues
|
$
|
489,954
|
$
|
607,045
|
$
|
117,091
|
23.9
|
%
|
||||||||
Cost of revenues
|
329,207
|
392,279
|
63,072
|
19.2
|
%
|
|||||||||||
Gross profit
|
160,747
|
214,766
|
54,019
|
33.6
|
%
|
|||||||||||
Operating expenses:
|
||||||||||||||||
Research and development, net
|
38,220
|
54,966
|
16,746
|
43.8
|
%
|
|||||||||||
Sales and marketing
|
38,200
|
50,032
|
11,832
|
31.0
|
%
|
|||||||||||
General and administrative
|
13,317
|
18,682
|
5,365
|
40.3
|
%
|
|||||||||||
Total operating expenses
|
89,737
|
123,680
|
33,943
|
37.8
|
%
|
|||||||||||
Operating income
|
71,010
|
91,086
|
20,076
|
28.3
|
%
|
|||||||||||
Financial income (expenses)
|
(1,287
|
)
|
9,158
|
10,445
|
N/A
|
|||||||||||
Income before taxes on income
|
69,723
|
100,244
|
30,521
|
43.8
|
%
|
|||||||||||
Taxes on income
|
6,270
|
16,072
|
9,802
|
156.3
|
%
|
|||||||||||
Net income
|
$
|
63,453
|
$
|
84,172
|
$
|
20,719
|
32.7
|
%
|
Year Ended
December 31, |
2016 to 2017 |
|||||||||||||||
2016
(unaudited)
|
2017
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Revenues
|
$
|
489,954
|
$
|
607,045
|
$
|
117,091
|
23.9
|
%
|
Year Ended
December 31, |
2016 to 2017
|
|||||||||||||||
2016
(unaudited)
|
2017
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Cost of revenues
|
$
|
329,207
|
$
|
392 ,279
|
$
|
63,072
|
19.2
|
%
|
||||||||
Gross profit
|
$
|
160,747
|
$
|
214,766
|
$
|
54,019
|
33.6
|
%
|
· |
an increase in the volume of products sold;
|
· |
increased warranty expenses and warranty accruals of $5.3 million associated with the rapid increase in our install base;
|
· |
increased shipment and logistical costs of $11.1 million attributed, in part, to the growth in volumes shipped, and to an increase in air shipments caused by power component shortages; and
|
· |
increased personnel-related costs of $8.9 million connected to the expansion of our operations and increased support headcount which is growing in parallel with our growing install base worldwide.
|
· |
reductions in per-unit production costs
that exceeded price erosion of our products;
|
· |
increased efficiency in our supply chain;
|
· |
lower costs associated with warranty product replacements; and
|
· |
general economies of scale in our personnel-related costs and other costs associated with our support and operations departments.
|
Year Ended
December 31, |
2016 to 2017
|
|||||||||||||||
2016
(unaudited)
|
2017
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Research and development, net
|
$
|
38,220
|
$
|
54,966
|
$
|
16,746
|
43.8
|
%
|
· |
an increase in personnel-related costs of $11.7 million as a result of an increased headcount of engineers. The increase in headcount reflects our continuing investment in enhancements of existing products as well as development associated with bringing new products to market;
|
· |
expenses related to other directly related overhead costs that increased by $2.2 million;
|
· |
expenses related to consultants and sub‑contractors that increased by $1.1 million;
|
· |
depreciation expenses related to lab equipment that increased by $1.0 million; and
|
· |
materials consumption for development, travel expenses and other expenses that increased by $0.7 million.
|
Year Ended
December 31, |
2016 to 2017
|
|||||||||||||||
2016
(unaudited)
|
2017
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Sales and marketing
|
$
|
38,200
|
$
|
50,032
|
$
|
11,832
|
31.0
|
%
|
· |
an increase in personnel-related costs of $9.0 million as a result of an increase in headcount supporting our growth in the U.S., Europe,
and Asia, as well as salary increases
;
|
· |
expenses related to consultants and sub‑contractors that increased by $0.9 million;
|
· |
expenses related to trade shows and marketing activities that increased by $0.8 million;
|
· |
expenses related to other directly related overhead costs that increased by $0.7 million; and
|
· |
expenses related to travel that increased by $0.4 million.
|
Year Ended
December 31, |
2016 to 2017
|
|||||||||||||||
2016
(unaudited)
|
2017
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
General and administrative
|
$
|
13,317
|
$
|
18,682
|
$
|
5,365
|
40.3
|
%
|
· |
an increase in personnel-related costs of $2.5 million related to (i) higher headcount in the legal, finance, human resources, and information technology department, functions required of a fast-growing public company and (ii) increased expenses related to equity-based compensation and changes in management compensation;
|
· |
legal expenses increased by $1.8 million mainly due to legal proceedings initiated by us during 2017 and settled by the end of 2017
;
|
· |
costs related to the accrual of doubtful debts increased by $0.7 million; and
|
· |
other overhead costs, costs related to being a public company and depreciation, all of which increased by $0.4 million.
|
Year Ended
December 31, |
2016 to 2017
|
|||||||||||||||
2016
(unaudited)
|
2017
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Financial Income (Expenses)
|
$
|
(1,287
|
)
|
$
|
9,158
|
$
|
10,445
|
N/A
|
· |
an increase of $10.6 million in foreign exchange fluctuations between the Euro and the New Israeli Shekel against the U.S. Dollar; and
|
· |
an increase of $1.0 million in interest income,
net of accretion (amortization) of discount (premium) on marketable securities.
|
Year Ended
December 31, |
2016 to 2017
|
|||||||||||||||
2016
(unaudited)
|
2017
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Taxes on income
|
$
|
6,270
|
$
|
16,072
|
$
|
9,802
|
156.3
|
%
|
· |
a one-time transition tax of $18.7 million on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017;
|
· |
an increase of $0.6 million in
current tax expenses;
|
· |
an increase of $9.2 million in deferred tax assets (presented as tax income);
and
|
· |
$0.3 million of income related to the previous year’s tax credit.
|
Year Ended
December 31, |
2016 to 2017
|
|||||||||||||||
2016
(unaudited)
|
2017
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Net income
|
$
|
63,453
|
$
|
84,172
|
$
|
20,719
|
32.7
|
%
|
Six Months Ended December 31,
|
2015 to 2016
|
|||||||||||||||
2015
(unaudited) |
2016
|
Change
|
||||||||||||||
(In thousands)
|
||||||||||||||||
Revenues
|
$
|
239,886
|
$
|
239,997
|
$
|
111
|
0.0
|
%
|
||||||||
Cost of revenues
|
167,777
|
159,097
|
(8,680
|
)
|
(5.2
|
)%
|
||||||||||
Gross profit
|
72,109
|
80,900
|
8,791
|
12.2
|
%
|
|||||||||||
Operating expenses:
|
||||||||||||||||
Research and development, net
|
15,290
|
20,279
|
4,989
|
32.6
|
%
|
|||||||||||
Sales and marketing
|
17,077
|
20,444
|
3,367
|
19.7
|
%
|
|||||||||||
General and administrative
|
5,606
|
6,790
|
1,184
|
21.1
|
%
|
|||||||||||
Total operating expenses
|
37,973
|
47,513
|
9,540
|
25.1
|
%
|
|||||||||||
Operating income
|
34,136
|
33,387
|
(749
|
)
|
(2.2
|
)%
|
||||||||||
Financial expenses
|
1,031
|
2,789
|
1,758
|
170.5
|
%
|
|||||||||||
Income before taxes on income
|
33,105
|
30,598
|
(2,507
|
)
|
(7.6
|
)%
|
||||||||||
Taxes on income (tax benefit)
|
(5,432
|
)
|
5,217
|
10,649
|
N/A
|
|||||||||||
Net income
|
$
|
38,537
|
$
|
25,381
|
$
|
(13,156
|
)
|
(34.1
|
)%
|
· |
Revenues for the six-month period ended December 31, 2016 remained stable when compared to revenues in the same period in the prior year.
|
· |
An increase of $8.8 million in gross profit principally due to:
|
o |
Reductions in per unit production costs
|
o |
Installation of automatic assembly line for optimizers and self-manufacturing of sub components
|
o |
Lower costs associated with warranty product replacements
|
o |
Cash received from our insurance company covering a bad debt from a former customer that declared bankruptcy
|
· |
An increase of $9.5 million in operating expenses principally due to:
|
o |
Increase in personnel-related costs to support (1) our continuing investment in enhancements of existing products as well as development associated with bringing new products to market; (2) our growth in the U.S., European, and other markets such as Australia and Japan; and (3) higher headcount in the legal, finance, human resources, and information technology department functions required of a fast-growing publicly-traded company
|
· |
An increase of $1.8 million in financial
expenses mainly due to:
|
o |
Foreign exchange fluctuations between the Euro and the New Israeli Shekel against the U.S. Dollar
|
· |
An increase of $10.6 million in tax expenses
principally
due to:
|
o |
A reversal of deferred tax assets recorded during fiscal 2016
|
o |
Exhaustion of carry forwards of net operating loss balances related to our past losses
|
Fiscal Year ended June 30,
|
Six Months Ended December 31,
|
Fiscal Year ended
December 31,
|
||||||||||||||
2016
|
2016
|
2017
|
2018
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Net cash provided by operating activities
|
$
|
52,427
|
$
|
49,098
|
$
|
136,665
|
$
|
189,079
|
||||||||
Net cash used in investing activities
|
(125,837
|
)
|
(19,747
|
)
|
(85,407
|
)
|
(152,628
|
)
|
||||||||
Net cash provided by financing activities
|
2,779
|
1,284
|
7,240
|
(7,955
|
)
|
|||||||||||
Increase (decrease) in cash and cash equivalents
|
$
|
(70,631
|
)
|
$
|
30,635
|
$
|
58,498
|
$
|
28,496
|
Payment Due By Period
|
||||||||||||||||||||
Total
|
Less
Than 1 Year |
1 – 3
Years |
4 – 5
Years |
More
Than 5 Years |
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Operating leases(1)
|
$
|
21,417
|
$
|
6,933
|
$
|
7,310
|
$
|
4,730
|
$
|
2,444
|
||||||||||
Purchase commitments under agreements(2)
|
262,979
|
262,979
|
-
|
-
|
-
|
|||||||||||||||
Capital expenditures(3)
|
40,052
|
40,052
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
324,448
|
$
|
309,964
|
$
|
7,310
|
$
|
4,730
|
$
|
2,444
|
(1) |
Represents future minimum lease commitments under non‑cancellable operating lease agreements through which we lease our operating facilities.
|
(2) |
Represents non‑cancelable amounts associated with our manufacturing contracts. Such purchase commitments are based on our forecasted manufacturing requirements and typically provide for fulfillment within agreed‑upon or commercially standard lead‑times for the particular part or product. The timing and amounts of payments represent our best estimates and may change due to business needs and other factors.
|
(3) |
Represents non‑cancelable amounts associated with purchases of automated assembly lines and other machinery related to our manufacturing.
|
Consolidated Financial Statements
|
|
F-2
|
|
F-5
|
|
F-7
|
|
F-8
|
|
F-9
|
|
F-11
|
|
F-13
|
Mar. 31,
2017 |
June 30,
2017 |
Sept. 30,
2017 |
Dec. 31,
2017 |
Mar. 31,
2018 |
June 30,
2018 |
Sept. 30,
2018 |
Dec. 31,
2018 |
|||||||||||||||||||||||||
(In thousands, unaudited)
|
||||||||||||||||||||||||||||||||
Revenues
|
$
|
115,054
|
$
|
136,099
|
$
|
166,552
|
$
|
189,340
|
$
|
209,871
|
$
|
227,118
|
$
|
236,578
|
$
|
263,670
|
||||||||||||||||
Cost of revenues
|
76,378
|
89,033
|
108,498
|
118,370
|
130,274
|
145,172
|
158,596
|
183,959
|
||||||||||||||||||||||||
Gross profit
|
38,676
|
47,066
|
58,054
|
70,970
|
79,597
|
81,946
|
77,982
|
79,711
|
||||||||||||||||||||||||
Operating expense
|
||||||||||||||||||||||||||||||||
Research and development
|
11,458
|
12,725
|
14,363
|
16,420
|
17,875
|
19,551
|
20,109
|
24,710
|
||||||||||||||||||||||||
Sales and marketing
|
10,775
|
11,961
|
13,217
|
14,079
|
16,205
|
15,954
|
16,938
|
19,210
|
||||||||||||||||||||||||
General and administrative
|
4,439
|
3,265
|
5,078
|
5,900
|
4,753
|
5,776
|
6,898
|
11,837
|
||||||||||||||||||||||||
Total operating expenses
|
26,672
|
27,951
|
32,658
|
36,399
|
38,833
|
41,281
|
43,945
|
55,757
|
||||||||||||||||||||||||
Operating income
|
12,004
|
19,115
|
25,396
|
34,571
|
40,764
|
40,665
|
34,037
|
23,954
|
||||||||||||||||||||||||
Financial income (expenses)
|
1,410
|
3,595
|
2,666
|
1,487
|
584
|
(2,480
|
)
|
(689
|
)
|
288
|
||||||||||||||||||||||
Income before taxes on income
|
13,414
|
22,710
|
28,062
|
36,058
|
41,348
|
38,185
|
33,348
|
24,242
|
||||||||||||||||||||||||
Taxes on income (tax benefit)
|
(761
|
)
|
186
|
91
|
16,556
|
5,662
|
3,617
|
(12,295
|
)
|
12,093
|
||||||||||||||||||||||
Net income
|
$
|
14,175
|
$
|
22,524
|
$
|
27,971
|
$
|
19,502
|
$
|
35,686
|
$
|
34,568
|
$
|
45,643
|
$
|
12,149
|
||||||||||||||||
Net loss attributable to noncontrolling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
787
|
||||||||||||||||||||||||
Net income attributable to SolarEdge Technologies Inc.
|
$
|
14,175
|
$
|
22,524
|
$
|
27,971
|
$
|
19,502
|
$
|
35,686
|
$
|
34,568
|
$
|
45,643
|
$
|
12,936
|
Name
|
Age
(1)
|
Position(s) Held
|
||
Guy Sella
|
54
|
Chief Executive Officer and Chairman of the Board
|
||
Ronen Faier
|
47
|
Chief Financial Officer
|
||
Rachel Prishkolnik
|
50
|
Vice President, General Counsel & Corporate Secretary
|
||
Zvi Lando
|
54
|
Vice President, Global Sales
|
||
Lior Handelsman
|
45
|
Vice President, Marketing and Product Strategy
|
||
Yoav Galin
|
45
|
Vice President, Research & Development
|
||
Meir Adest
|
43
|
Chief Information Officer
|
Name
|
Age
(1)
|
Position(s) Held
|
||
Guy Sella
|
54
|
Chief Executive Officer and Chairman of the Board
|
||
Dan Avida
|
55
|
Director*
|
||
Yoni Cheifetz
|
58
|
Director*
|
||
Marcel Gani
|
66
|
Director*
|
||
Doron Inbar
|
69
|
Director*
|
||
Avery More
|
64
|
Director*
|
||
Tal Payne
|
47
|
Director*
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding stock awards(a)
|
Weighted-average exercise price of outstanding stock awards
(b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
|||||||||
Equity compensation plans approved by security holders
(1)
|
5,263,991
|
$
|
5.06
|
3,822,355
|
||||||||
Equity compensation plans not approved by security holders
|
—
|
—
|
—
|
|||||||||
Total
|
5,263,991
|
$
|
5.06
|
3,822,355
|
(1) |
Includes in column (a) 3,812,812 shares of common stock issuable upon exercise of stock awards outstanding under the Company’s 2015 Global Incentive Plan, 1,451,179 shares of common stock issuable upon exercise of options outstanding under the Company’s 2007 Global Incentive Plan. Includes in column (c) 2,468,721 shares of common stock available for future issuance under the Company’s 2015 Global Incentive Plan and 1,353,634 shares of common stock available for future issuance under the Company’s Employee Stock Purchase Plan. Upon consummation of our initial public offering, the Company’s 2007 Global Incentive Plan was terminated and no further awards can be granted under this plan.
|
Page
|
|
F-2
|
|
F-5
|
|
F-7
|
|
F-8
|
|
F-9
|
|
F-11
|
|
F-13
|
Tel-Aviv, Israel
|
|
February 28, 2019
|
Tel-Aviv, Israel
|
|
February 28, 2019
|
December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
ASSETS
|
||||||||||||
CURRENT ASSETS:
|
||||||||||||
Cash and cash equivalents
|
$
|
191,633
|
$
|
163,163
|
$
|
104,683
|
||||||
Short-term bank deposits
|
6,001
|
-
|
-
|
|||||||||
Restricted cash
|
1,628
|
1,516
|
897
|
|||||||||
Marketable securities
|
118,680
|
77,264
|
74,465
|
|||||||||
Trade receivables, net
|
173,579
|
109,528
|
71,041
|
|||||||||
Prepaid expenses and other current assets
|
45,073
|
42,223
|
21,347
|
|||||||||
Inventories
|
141,519
|
82,992
|
67,363
|
|||||||||
Total
current assets
|
678,113
|
476,686
|
339,796
|
|||||||||
LONG-TERM ASSETS:
|
||||||||||||
Marketable securities
|
74,256
|
103,120
|
44,262
|
|||||||||
Property, plant and equipment , net
|
119,329
|
51,182
|
36,122
|
|||||||||
Deferred tax assets, net
|
14,699
|
8,340
|
2,815
|
|||||||||
Intangible assets, net
|
38,504
|
1,115
|
1,259
|
|||||||||
Goodwill
|
34,874
|
-
|
-
|
|||||||||
Other non-current assets
|
4,697
|
862
|
489
|
|||||||||
Total
long term assets
|
286,359
|
164,619
|
84,947
|
|||||||||
Total
assets
|
$
|
964,472
|
$
|
641,305
|
$
|
424,743
|
Year ended December 31,
|
Six months
ended December
31, 2016
|
Year ended
June
30, 2016 |
||||||||||||||
2018
|
2017
|
|||||||||||||||
Revenues
|
$
|
937,237
|
$
|
607,045
|
$
|
239,997
|
$
|
489,843
|
||||||||
Cost of revenues
|
618,001
|
392,279
|
159,097
|
337,887
|
||||||||||||
Gross profit
|
319,236
|
214,766
|
80,900
|
151,956
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development, net
|
82,245
|
54,966
|
20,279
|
33,231
|
||||||||||||
Sales and marketing
|
68,307
|
50,032
|
20,444
|
34,833
|
||||||||||||
General and administrative
|
29,264
|
18,682
|
6,790
|
12,133
|
||||||||||||
Total
operating expenses
|
179,816
|
123,680
|
47,513
|
80,197
|
||||||||||||
Operating income
|
139,420
|
91,086
|
33,387
|
71,759
|
||||||||||||
Financial expenses (income), net
|
2,297
|
(9,158
|
)
|
2,789
|
(471
|
)
|
||||||||||
Income before taxes on income
|
137,123
|
100,244
|
30,598
|
72,230
|
||||||||||||
Taxes on income (tax benefit)
|
9,077
|
16,072
|
5,217
|
(4,379
|
)
|
|||||||||||
Net income
|
$
|
128,046
|
$
|
84,172
|
$
|
25,381
|
$
|
76,609
|
||||||||
Net loss attributable to Non-controlling interests
|
787
|
-
|
-
|
-
|
||||||||||||
Net income attributable to SolarEdge Technologies, Inc.
|
$
|
128,833
|
$
|
84,172
|
$
|
25,381
|
$
|
76,609
|
||||||||
Net basic earnings per share of common stock attributable to SolarEdge Technologies, Inc.
|
$
|
2.85
|
$
|
1.99
|
$
|
0.62
|
$
|
1.92
|
||||||||
Net diluted earnings per share of common stock attributable to SolarEdge Technologies, Inc.
|
$
|
2.69
|
$
|
1.85
|
$
|
0.58
|
$
|
1.73
|
||||||||
Weighted average number of shares used in computing net basic earnings per share of common stock
|
45,235,310
|
42,209,238
|
41,026,926
|
39,987,935
|
||||||||||||
Weighted average number of shares used in computing net diluted earnings per share of common stock
|
47,980,002
|
45,425,307
|
43,839,342
|
44,376,075
|
Year ended December 31, |
Six months
ended December
31, 2016
|
Year ended
June
30, 2016 |
||||||||||||||
2018
|
2017
|
|||||||||||||||
Net income
|
$
|
128,046
|
$
|
84,172
|
$
|
25,381
|
$
|
76,609
|
||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Changes in unrealized gains (losses) net of tax
|
(360
|
)
|
(297
|
)
|
(193
|
)
|
56
|
|||||||||
Reclassification adjustments for losses included in net income
|
137
|
-
|
-
|
1
|
||||||||||||
Net change
|
(223
|
)
|
(297
|
)
|
(193
|
)
|
57
|
|||||||||
Cash flow hedges:
|
||||||||||||||||
Changes in unrealized gains, net of tax
|
31
|
975
|
93
|
412
|
||||||||||||
Reclassification adjustments for gains, net of tax included in net income
|
(31
|
)
|
(994
|
)
|
(317
|
)
|
(169
|
)
|
||||||||
Net change
|
-
|
(19
|
)
|
(224
|
)
|
243
|
||||||||||
Foreign currency translation adjustments, net
|
310
|
29
|
(178
|
)
|
193
|
|||||||||||
Total other comprehensive income (loss)
|
87
|
(287
|
)
|
(595
|
)
|
493
|
||||||||||
Comprehensive income
|
$
|
128,133
|
$
|
83,885
|
$
|
24,786
|
$
|
77,102
|
||||||||
Comprehensive income attributable to Non-controlling interests
|
150
|
-
|
-
|
-
|
||||||||||||
Comprehensive income attributable to SolarEdge Technologies, Inc.
|
$
|
127,983
|
$
|
83,885
|
$
|
24,786
|
$
|
77,102
|
SolarEdge Technologies, Inc. Stockholders’ Equity
|
||||||||||||||||||||||||||||||||
Common stock
|
Additional paid in
Capital
|
Accumulated
Other comprehensive
Income (loss)
|
Retained earnings (Accumulated
Deficit)
|
Total
|
Non-controlling interests
|
Total
stockholders’
equity
|
||||||||||||||||||||||||||
Number
|
Amount
|
|||||||||||||||||||||||||||||||
Balance as of June 30, 2015
|
39,297,539
|
$
|
4
|
$
|
287,152
|
$
|
(222
|
)
|
$
|
(119,990
|
)
|
$
|
166,944
|
$
|
-
|
$
|
166,944
|
|||||||||||||||
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards
|
1,592,383
|
* -
|
2,973
|
-
|
-
|
2,973
|
-
|
2,973
|
||||||||||||||||||||||||
Equity based compensation expenses to employees and non-employee consultants
|
-
|
-
|
9,089
|
-
|
-
|
9,089
|
-
|
9,089
|
||||||||||||||||||||||||
Other comprehensive income adjustments
|
-
|
-
|
-
|
493
|
-
|
493
|
-
|
493
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
76,609
|
76,609
|
-
|
76,609
|
||||||||||||||||||||||||
Balance as of June 30, 2016
|
40,889,922
|
$
|
4
|
$
|
299,214
|
$
|
271
|
$
|
(43,381
|
)
|
$
|
256,108
|
$
|
-
|
$
|
256,108
|
||||||||||||||||
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards
|
286,150
|
* -
|
349
|
-
|
-
|
349
|
-
|
349
|
||||||||||||||||||||||||
Issuance of Common stock under employee stock purchase plan
|
83,319
|
* -
|
935
|
-
|
-
|
935
|
-
|
935
|
||||||||||||||||||||||||
Equity based compensation expenses to employees and non-employee consultants
|
-
|
-
|
6,600
|
-
|
-
|
6,600
|
-
|
6,600
|
||||||||||||||||||||||||
Other comprehensive loss adjustments
|
-
|
-
|
-
|
(595
|
)
|
-
|
(595
|
)
|
-
|
(595
|
)
|
|||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
25,381
|
25,381
|
-
|
25,381
|
||||||||||||||||||||||||
Balance as of December 31, 2016
|
41,259,391
|
$
|
4
|
$
|
307,098
|
$
|
(324
|
)
|
$
|
(18,000
|
)
|
$
|
288,778
|
$
|
-
|
$
|
288,778
|
SolarEdge Technologies, Inc. Stockholders’ Equity
|
||||||||||||||||||||||||||||||||
Common stock
|
Additional paid in
Capital
|
Accumulated
Other comprehensive
Income (loss)
|
Retained earnings (Accumulated
Deficit)
|
Total
|
Non-controlling interests
|
Total
stockholders’
equity
|
||||||||||||||||||||||||||
Number
|
Amount
|
|||||||||||||||||||||||||||||||
Balance as of December 31, 2016
|
41,259,391
|
$
|
4
|
$
|
307,098
|
$
|
(324
|
)
|
$
|
(18,000
|
)
|
$
|
288,778
|
$
|
-
|
$
|
288,778
|
|||||||||||||||
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards
|
2,368,152
|
* -
|
4,854
|
-
|
-
|
4,854
|
-
|
4,854
|
||||||||||||||||||||||||
Issuance of Common stock under employee stock purchase plan
|
185,058
|
* -
|
2,386
|
-
|
-
|
2,386
|
-
|
2,386
|
||||||||||||||||||||||||
Equity based compensation expenses to employees and non-employee consultants
|
-
|
-
|
17,564
|
-
|
-
|
17,564
|
-
|
17,564
|
||||||||||||||||||||||||
Other comprehensive loss adjustments
|
-
|
-
|
-
|
(287
|
)
|
-
|
(287
|
)
|
-
|
(287
|
)
|
|||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
84,172
|
84,172
|
-
|
84,172
|
||||||||||||||||||||||||
Balance as of December 31, 2017
|
43,812,601
|
$
|
4
|
$
|
331,902
|
$
|
(611
|
)
|
$
|
66,172
|
$
|
397,467
|
$
|
-
|
$
|
397,467
|
||||||||||||||||
Cumulative effect of adopting ASC 606
|
-
|
-
|
-
|
-
|
(3,872
|
)
|
(3,872
|
)
|
-
|
(3,872
|
)
|
|||||||||||||||||||||
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards
|
2,122,932
|
1
|
6,333
|
-
|
-
|
6,334
|
-
|
6,334
|
||||||||||||||||||||||||
Issuance of Common stock under employee stock purchase plan
|
117,269
|
* -
|
3,687
|
-
|
-
|
3,687
|
-
|
3,687
|
||||||||||||||||||||||||
Equity based compensation expenses to employees and non-employee consultants
|
-
|
-
|
30,618
|
-
|
-
|
30,618
|
-
|
30,618
|
||||||||||||||||||||||||
Non-controlling interests related to business combination
|
-
|
-
|
-
|
-
|
-
|
-
|
22,159
|
22,159
|
||||||||||||||||||||||||
Purchase of Non-controlling interests
|
-
|
-
|
(746
|
)
|
-
|
-
|
(746
|
)
|
(13,204
|
)
|
(13,950
|
)
|
||||||||||||||||||||
Other comprehensive loss adjustments
|
-
|
-
|
-
|
87
|
-
|
87
|
150
|
237
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
128,833
|
128,833
|
(787
|
)
|
128,046
|
|||||||||||||||||||||||
Balance as of December 31, 2018
|
46,052,802
|
$
|
5
|
$
|
371,794
|
$
|
(524
|
)
|
$
|
191,133
|
$
|
562,408
|
$
|
8,318
|
$
|
570,726
|
Year ended December 31, |
Six months
ended
December 31,
|
Year ended
June 30,
|
||||||||||||||
2018
|
2017
|
2016
|
2016
|
|||||||||||||
Cash flows provided by operating activities:
|
||||||||||||||||
Net income
|
$
|
128,046
|
$
|
84,172
|
$
|
25,381
|
$
|
76,609
|
||||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||
Depreciation of property, plant and equipment
|
11,426
|
7,011
|
2,702
|
3,763
|
||||||||||||
Amortization of intangible assets
|
1,193
|
144
|
57
|
84
|
||||||||||||
Amortization of premium and accretion of discount on available-for-sale marketable securities
|
1,242
|
2,061
|
681
|
532
|
||||||||||||
Stock-based compensation
|
30,618
|
17,564
|
6,600
|
9,089
|
||||||||||||
Capital loss from disposal of equipment
|
445
|
-
|
-
|
-
|
||||||||||||
Realized loss from sale of available-for-sale marketable securities
|
137
|
-
|
-
|
-
|
||||||||||||
Realized gain from cash flow hedge
|
(31
|
)
|
(994
|
)
|
(317
|
)
|
(169
|
)
|
||||||||
Changes in assets and liabilities:
|
||||||||||||||||
Inventories
|
(20,178
|
)
|
(15,690
|
)
|
14,022
|
(7,356
|
)
|
|||||||||
Prepaid expenses and other assets
|
(2,711
|
)
|
(20,943
|
)
|
(127
|
)
|
10,814
|
|||||||||
Trade receivables, net
|
(60,514
|
)
|
(38,139
|
)
|
1,555
|
(37,271
|
)
|
|||||||||
Deferred tax assets and liabilities, net
|
(7,093
|
)
|
(5,455
|
)
|
3,652
|
(6,380
|
)
|
|||||||||
Trade payables, net
|
31,482
|
35,455
|
(14,464
|
)
|
(32,200
|
)
|
||||||||||
Employees and payroll accruals
|
4,583
|
9,394
|
2,996
|
3,278
|
||||||||||||
Warranty obligations
|
41,878
|
20,436
|
7,183
|
19,313
|
||||||||||||
Deferred revenues
|
37,041
|
14,106
|
1,335
|
8,578
|
||||||||||||
Other liabilities
|
(8,485
|
)
|
27,543
|
(2,235
|
)
|
3,846
|
||||||||||
Net cash provided by operating activities
|
189,079
|
136,665
|
49,021
|
52,530
|
||||||||||||
Cash flows from investing activities:
|
||||||||||||||||
Business combinations, net of cash acquired
|
(94,737
|
)
|
-
|
-
|
-
|
|||||||||||
Purchase of property, plant and equipment
|
(38,608
|
)
|
(21,382
|
)
|
(11,025
|
)
|
(15,690
|
)
|
||||||||
Purchase of intangible assets
|
-
|
-
|
(600
|
)
|
(800
|
)
|
||||||||||
Investment in short term bank deposits
|
(6,001
|
)
|
-
|
-
|
-
|
|||||||||||
Investment in available-for-sale marketable securities
|
(142,627
|
)
|
(143,675
|
)
|
(40,858
|
)
|
(118,511
|
)
|
||||||||
Proceed from sales and maturities of available-for-sale marketable securities
|
129,345
|
80,269
|
32,782
|
6,350
|
||||||||||||
Net cash used in investing activities
|
$
|
(152,628
|
)
|
$
|
(84,788
|
)
|
$
|
(19,701
|
)
|
$
|
(128,651
|
)
|
Year ended
December
31, 2018
|
Year ended
December
31, 2017
|
Six months
ended December
31, 2016
|
Year ended
June
30, 2016 |
|||||||||||||
Cash flows from financing activities:
|
||||||||||||||||
Repayment of bank loan
|
$
|
(3,786
|
)
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
Issuance costs related to initial public offering
|
-
|
-
|
-
|
(194
|
)
|
|||||||||||
Proceeds from issuance of shares under stock purchase plan and upon exercise of stock-based awards
|
10,021
|
7,240
|
1,284
|
2,973
|
||||||||||||
Purchase of Non-controlling interests
|
(14,190
|
)
|
-
|
-
|
-
|
|||||||||||
Net cash provided by financing activities
|
(7,955
|
)
|
7,240
|
1,284
|
2,779
|
|||||||||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
28,496
|
59,117
|
30,604
|
(73,342
|
)
|
|||||||||||
Cash, cash equivalents and restricted cash at the beginning of the period
|
164,679
|
105,580
|
74,960
|
148,389
|
||||||||||||
Effect of exchange rate differences on cash, cash equivalents and restricted cash
|
86
|
(18
|
)
|
16
|
(87
|
)
|
||||||||||
Cash, cash equivalents and restricted cash at the end of the period
|
$
|
193,261
|
$
|
164,679
|
$
|
105,580
|
$
|
74,960
|
||||||||
Supplemental disclosure of non-cash investing activities:
|
||||||||||||||||
Net change in accrued expenses and other accounts payable related to property and equipment additions
|
$
|
-
|
$
|
598
|
$
|
-
|
$
|
1,187
|
||||||||
Supplemental disclosure of cash flow information:
|
||||||||||||||||
Cash paid for taxes
|
$
|
15,368
|
$
|
3,100
|
$
|
1,103
|
$
|
1,178
|
NOTE 1:- |
GENERAL
|
a. |
SolarEdge Technologies, Inc. (the “Company”) and its subsidiaries design, develop, and sell an intelligent inverter solution designed to maximize power generation at the individual photovoltaic (“PV”) module level while lowering the cost of energy produced by the solar PV system and providing comprehensive and advanced safety features. The Company’s products consist mainly of (i) power optimizers designed to maximize energy throughput from each and every module through constant tracking of Maximum Power Point individually per module, (ii) inverters which invert direct current (DC) from the PV module to alternating current (AC), (iii) a related cloud-based monitoring platform, that collects and processes information from the power optimizers and inverters of a solar PV system to enable customers and system owners as applicable, to monitor and manage the solar PV systems and (iv) a storage solution that is used to increase energy independence and maximize self-consumption for homeowners by utilizing a battery that is sold separately by third party manufacturers, to store and supply power as needed (the “StorEdge solution”). The StorEdge solution is designed to provide smart energy functions such as maximizing self-consumption, Time-of-Use programming for desired hours of the day, and home energy backup solutions.
|
b. |
Basis of presentation:
|
NOTE 1:- |
GENERAL (Cont.)
|
c. |
For the years ended December 31, 2018, and December 31, 2017, and the six months ended December 31, 2016, the Company had one major customer (customer with attributable revenues that represents more than 10% of total revenues) that accounted for approximately 19.4%, 14.8% and 11.2% of the Company’s consolidated revenues, respectively. For the year ended June 30, 2016, the Company had three major customers that accounted for approximately 32.6% of the Company’s consolidated revenues (see Note 19).
|
d. |
As of December 31, 2018 and 2017, the Company had two major customers (customer with a balance that represents more than 10% of total trade receivables) which accounted in the aggregate for approximately 41.3% and 35.2%, respectively, of the Company’s consolidated trade receivables.
|
e. |
The Company depends on three contract manufacturers and several limited or single source component suppliers. The Company is in a process of discontinuing its activity with one of those contract manufacturers. Reliance on these vendors makes the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields, and costs.
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES
|
a. |
Principles of consolidation:
|
b. |
Use of estimates:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
c. |
Financial statements in U.S. dollars:
|
d. |
Basic and Diluted Net
Earnings
Per Share Attributable to
SolarEdge
Technologies, Inc.
:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Year ended December 31,
|
Six months
ended
December 31,
|
Year ended
June 30,
|
||||||||||||||
2018
|
2017
|
2016
|
2016
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net income
|
$
|
128,046
|
$
|
84,172
|
$
|
25,381
|
$
|
76,609
|
||||||||
Net loss attributable to Non-controlling interests
|
787
|
-
|
-
|
-
|
||||||||||||
Net income attributable to SolarEdge Technologies, Inc.
|
$
|
128,833
|
$
|
84,172
|
$
|
25,381
|
$
|
76,609
|
||||||||
Denominator:
|
||||||||||||||||
Shares used in computing net earnings per share of common stock, basic
|
45,235,310
|
42,209,238
|
41,026,926
|
39,987,935
|
||||||||||||
Effect of stock-based awards
|
2,744,692
|
3,216,069
|
2,812,416
|
4,388,140
|
||||||||||||
Shares used in computing net earnings per share of common stock, diluted
|
47,980,002
|
45,425,307
|
43,839,342
|
44,376,075
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
e. |
Cash and cash equivalents:
|
f. |
Short-term bank deposits:
|
g. |
Marketable Securities:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
h. |
Restricted cash:
|
i. |
Inventories:
|
j. |
Property, plant and equipment:
|
%
|
||
Buildings and plants
|
2.5 – 5 (mainly 2.5)
|
|
Computers and peripheral equipment
|
15 – 33 (mainly 33)
|
|
Office furniture and equipment
|
7 – 25 (mainly 7)
|
|
Machinery and equipment
|
7 – 33 (mainly 20)
|
|
Laboratory equipment
|
15 – 25 (mainly 15)
|
|
Leasehold improvements
|
over the shorter of the lease term
or useful economic life
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
k. |
Business Combination:
|
l. |
Intangible Assets:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
m. |
Goodwill:
|
n. |
Impairment of long-lived assets:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
p. |
Revenue recognition:
|
Year ended December 31,
|
Six months
ended
December 31,
|
Year ended
June 30,
|
||||||||||||||
2018
|
2017
|
2016
|
2016
|
|||||||||||||
Solar
|
$
|
914,285
|
$
|
607,045
|
$
|
239,997
|
$
|
489,843
|
||||||||
Non-solar
|
22,952
|
-
|
-
|
-
|
||||||||||||
Total revenues
|
$
|
937,237
|
$
|
607,045
|
$
|
239,997
|
$
|
489,843
|
(1) |
Identify the contract with a customer
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
(2) |
Identify the performance obligations in the contract
|
(3) |
Determine the transaction price
|
(4) |
Allocate the transaction price to the performance obligations in the contract
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
(5) |
Recognize revenue when a performance obligation is satisfied
|
Balance as of
December 31, 2017
|
Adjustments due
following adoption
of ASC 606
|
Balance as of
January 1, 2018
|
||||||||||
Deferred Revenues - Current term
|
$
|
2,559
|
$
|
(89
|
)
|
$
|
2,470
|
|||||
Deferred Revenues - Long term
|
31,453
|
3,961
|
35,414
|
|||||||||
Retained earnings
|
$
|
66,172
|
$
|
(3,872
|
)
|
$
|
62,300
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Year ended December 31, 2018
|
||||||||||||
As Reported
|
Balances before
adoption of
ASC 606
|
Effect of change
|
||||||||||
Statements of operations
|
||||||||||||
Revenues
|
$
|
937,237
|
$
|
937,168
|
$
|
69
|
||||||
Financial expenses (income), net
|
2,297
|
(122
|
) |
2,419
|
||||||||
Net income
|
128,046
|
130,396
|
(2,350
|
)
|
||||||||
Cash flows
|
||||||||||||
Net income
|
128,046
|
130,396
|
(2,350
|
)
|
||||||||
Changes in assets and liabilities:
|
||||||||||||
Deferred revenues
|
37,041
|
34,789
|
2,252
|
|||||||||
As of December 31, 2018
|
||||||||||||
As Reported
|
Balances before
adoption of
ASC 606
|
Effect of change
|
||||||||||
Balance Sheets
|
||||||||||||
Deferred Revenues - Current
|
14,351
|
14,559
|
(208
|
)
|
||||||||
Deferred Revenues - Long term
|
60,670
|
54,240
|
6,430
|
|||||||||
Retained earnings
|
$
|
191,133
|
$
|
195,005
|
$
|
(3,872
|
)
|
q. |
Cost of revenues:
|
r. |
Shipping and handling costs:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
s. |
Warranty obligations:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
t. |
Research and development costs:
|
u. |
Concentrations of credit risks:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Level 1- |
Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
Level 2- |
Include other inputs that are directly or indirectly observable in the marketplace.
|
Level 3- |
Unobservable inputs which are supported by little or no market activity.
|
w. |
Accounting for stock-based compensation:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Year ended December 31,
|
Six months
ended December
31, 2016
|
Year Ended
June
30, 2016
|
||||||||||||||
2018
|
2017
|
|||||||||||||||
Employee Stock Options
|
||||||||||||||||
Risk-free interest
|
2.32
|
%
|
2.14% - 2.17
|
%
|
1.28% - 1.34
|
%
|
1.39% - 1.97
|
%
|
||||||||
Dividend yields
|
0
|
%
|
0
|
%
|
0
|
%
|
0
|
%
|
||||||||
Volatility
|
56.53
|
%
|
58.08% - 58.10
|
%
|
55.33% - 55.34
|
%
|
55.45%-56.03
|
%
|
||||||||
Expected option term in years
|
6.06
|
6.06
|
6.06
|
5.50-6.11
|
||||||||||||
Estimated forfeiture rate
|
0
|
%
|
0
|
%
|
0
|
%
|
10.3
|
%
|
||||||||
Employee Stock Purchase Plan
|
||||||||||||||||
Risk-free interest
|
2.10% - 2.52
|
%
|
0.60% - 1.07
|
%
|
0.60
|
%
|
0.40
|
%
|
||||||||
Dividend yields
|
0
|
%
|
0
|
%
|
0
|
%
|
0
|
%
|
||||||||
Volatility
|
54.13% - 56.67
|
%
|
45.60% - 48.08
|
%
|
48.08
|
%
|
62.84
|
%
|
||||||||
Expected term
|
6 months
|
6 months
|
6 months
|
6 months
|
Year ended
December
31, 2018
|
Year ended
December
31, 2017
|
Six months
ended December
31, 2016
|
Year ended
June
30, 2016
|
|||||||||||||
Risk-free interest
|
2.81%-2.84
|
%
|
2.12% - 2.42
|
%
|
1.16% - 2.45
|
%
|
1.15%-2.21
|
%
|
||||||||
Dividend yields
|
0
|
%
|
0
|
%
|
0
|
%
|
0
|
%
|
||||||||
Volatility
|
58.18%-59.33
|
%
|
61.21% - 62.62
|
%
|
55.33% - 58.57
|
%
|
55.37%-55.75
|
%
|
||||||||
Contractual life in years
|
6-10
|
6-10
|
6 - 10
|
6.4-10
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
x. |
Income taxes:
|
y. |
Derivative financial instruments:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
z. |
Comprehensive income:
|
aa. |
New accounting pronouncements not yet effective:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
ab. |
Recently issued and adopted pronouncements:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
ac. |
Certain prior period amounts have been reclassified to conform to the current period presentation.
|
NOTE 3:- |
MARKETABLE SECURITIES
|
Amortized
cost
|
Gross unrealized
gains
|
Gross unrealized
losses
|
Fair
value
|
|||||||||||||
Available-for-sale – matures within one year:
|
||||||||||||||||
Corporate bonds
|
$
|
110,904
|
$
|
-
|
$
|
(519
|
)
|
$
|
110,385
|
|||||||
Governmental bonds
|
8,343
|
-
|
(48
|
)
|
8,295
|
|||||||||||
119,247
|
-
|
(567
|
)
|
118,680
|
||||||||||||
Available for-sale – matures after one year:
|
||||||||||||||||
Corporate bonds
|
74,564
|
-
|
(308
|
)
|
74,256
|
|||||||||||
74,564
|
-
|
(308
|
)
|
74,256
|
||||||||||||
Total
|
$
|
193,811
|
$
|
-
|
$
|
(875
|
)
|
$
|
192,936
|
NOTE 3:- |
MARKETABLE SECURITIES (Cont.)
|
Amortized
cost
|
Gross unrealized
gains
|
Gross unrealized
losses
|
Fair
value
|
|||||||||||||
Available for-sale – matures within one year:
|
||||||||||||||||
Corporate bonds
|
$
|
68,392
|
$
|
1
|
$
|
(121
|
)
|
$
|
68,272
|
|||||||
Governmental bonds
|
9,019
|
-
|
(27
|
)
|
8,992
|
|||||||||||
77,411
|
1
|
(148
|
)
|
77,264
|
||||||||||||
Available for-sale – matures after one year:
|
||||||||||||||||
Corporate bonds
|
95,540
|
-
|
(380
|
)
|
95,160
|
|||||||||||
Governmental bonds
|
8,023
|
-
|
(63
|
)
|
7,960
|
|||||||||||
103,563
|
-
|
(443
|
)
|
103,120
|
||||||||||||
Total
|
$
|
180,974
|
$
|
1
|
$
|
(591
|
)
|
$
|
180,384
|
Amortized
cost
|
Gross unrealized
gains
|
Gross unrealized
losses
|
Fair
value
|
|||||||||||||
Available for-sale – matures within one year:
|
||||||||||||||||
Corporate bonds
|
$
|
71,753
|
$
|
20
|
$
|
(54
|
)
|
$
|
71,719
|
|||||||
Governmental bonds
|
2,758
|
-
|
(12
|
)
|
2,746
|
|||||||||||
74,511
|
20
|
(66
|
)
|
74,465
|
||||||||||||
Available for-sale – matures after one year:
|
||||||||||||||||
Corporate bonds
|
39,435
|
3
|
(159
|
)
|
39,279
|
|||||||||||
Governmental bonds
|
5,004
|
-
|
(21
|
)
|
4,983
|
|||||||||||
44,439
|
3
|
(180
|
)
|
44,262
|
||||||||||||
Total
|
$
|
118,950
|
$
|
23
|
$
|
(246
|
)
|
$
|
118,727
|
NOTE 3:- |
MARKETABLE SECURITIES (Cont.)
|
12 months or less
|
Greater than 12 months
|
|||||||||||||||
Fair value
|
Gross unrealized losses
|
Fair value
|
Gross unrealized losses
|
|||||||||||||
As of
December 31, 2018
|
$
|
118,680
|
$
|
(567
|
)
|
$
|
74,256
|
$
|
(308
|
)
|
||||||
As of
December 31, 2017
|
$
|
72,269
|
$
|
(148
|
)
|
$
|
103,116
|
$
|
(443
|
)
|
||||||
As of
December 31, 2016
|
$
|
51,124
|
$
|
(66
|
)
|
$
|
39,373
|
$
|
(180
|
)
|
NOTE 4:- |
FAIR VALUE MEASUREMENTS
|
NOTE 4:- |
FAIR VALUE MEASUREMENTS (cont.)
|
|
Fair Value
Hierarchy
|
Fair value measurements
as of December 31,
|
||||||||||||
Description
|
2018
|
2017
|
2016
|
|||||||||||
Measured at fair value on a recurring basis:
|
||||||||||||||
Assets:
|
||||||||||||||
Cash equivalents:
|
||||||||||||||
Money market mutual funds
|
Level 1
|
$
|
1,767
|
$
|
6,163
|
$
|
6,510
|
|||||||
Derivative instruments asset
|
Level 2
|
-
|
-
|
19
|
||||||||||
Short-term marketable securities:
|
||||||||||||||
Corporate bonds
|
Level 2
|
110,385
|
68,272
|
71,719
|
||||||||||
Governmental bonds
|
Level 2
|
8,295
|
8,992
|
2,746
|
||||||||||
Long-term marketable securities:
|
||||||||||||||
Corporate bonds
|
Level 2
|
74,256
|
95,160
|
39,279
|
||||||||||
Governmental bonds
|
Level 2
|
-
|
7,960
|
4,983
|
||||||||||
Liabilities
|
||||||||||||||
Long-term Earn-out provision
|
Level 3
|
(332
|
)
|
-
|
-
|
|||||||||
Derivative instruments liability
|
Level 2
|
-
|
(180
|
)
|
-
|
NOTE 5:- |
PREPAID EXPENSES AND OTHER CURRENT ASSETS
|
As of December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Vendor non-trade receivables
(*)
|
$
|
28,284
|
$
|
33,719
|
$
|
15,209
|
||||||
Prepaid expenses and other
|
11,038
|
5,083
|
3,553
|
|||||||||
Government authorities
|
5,751
|
3,421
|
2,585
|
|||||||||
$
|
45,073
|
$
|
42,223
|
$
|
21,347
|
NOTE 6:- |
INVENTORIES
|
As of December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Raw materials
|
$
|
39,380
|
$
|
25,887
|
$
|
10,053
|
||||||
Work in process
|
18,115
|
-
|
-
|
|||||||||
Finished goods
|
84,024
|
57,105
|
57,310
|
|||||||||
$
|
141,519
|
$
|
82,992
|
$
|
67,363
|
NOTE 7:- |
PROPERTY, PLANT AND EQUIPMENT, NET
|
As of December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Cost:
|
||||||||||||
Land
|
$
|
6,592
|
$
|
-
|
$
|
-
|
||||||
Buildings and plants
|
18,196
|
-
|
-
|
|||||||||
Computers and peripheral equipment
|
13,896
|
9,872
|
6,053
|
|||||||||
Office furniture and equipment
|
9,005
|
1,785
|
1,505
|
|||||||||
Laboratory and testing equipment
|
18,160
|
13,732
|
9,589
|
|||||||||
Machinery and equipment
|
113,553
|
38,461
|
26,298
|
|||||||||
Leasehold improvements
|
11,741
|
7,536
|
5,898
|
|||||||||
Gross property, plant and equipment
|
191,143
|
71,386
|
49,343
|
|||||||||
Less - accumulated depreciation
|
71,814
|
20,204
|
13,221
|
|||||||||
Total property, plant and equipment, net
|
$
|
119,329
|
$
|
51,182
|
$
|
36,122
|
NOTE 8:- |
BUSINESS COMBINATION
|
NOTE 8:- |
BUSINESS COMBINATION (Cont.)
|
NOTE 8:- |
BUSINESS COMBINATION (Cont.)
|
Kokam
|
UPS Division
|
Total
|
||||||||||
Components of Purchase Price:
|
||||||||||||
Cash
|
$
|
87,004
|
$
|
12,322
|
$
|
99,326
|
||||||
Less cash acquired
|
(4,477
|
)
|
(112
|
)
|
(4,589
|
)
|
||||||
Earn-out provision
|
-
|
860
|
860
|
|||||||||
Total purchase price
|
$
|
82,527
|
$
|
13,070
|
$
|
95,597
|
||||||
Allocation of Purchase Price:
|
||||||||||||
Net tangible assets (liabilities):
|
||||||||||||
Trade receivables, net
|
$
|
4,113
|
$
|
220
|
$
|
4,333
|
||||||
Prepaid expenses and other current assets
|
1,390
|
23
|
1,413
|
|||||||||
Inventories
|
30,633
|
6,351
|
36,984
|
|||||||||
Property, plant and equipment, net
|
41,079
|
857
|
41,936
|
|||||||||
Other non-current assets
|
3,568
|
-
|
3,568
|
|||||||||
Trade payables
|
(5,956
|
)
|
(110
|
)
|
(6,066
|
)
|
||||||
Employees and payroll accruals
|
(2,046
|
)
|
-
|
(2,046
|
)
|
|||||||
Accrued expenses and other current liabilities
|
(6,426
|
)
|
(43
|
)
|
(6,469
|
)
|
||||||
Loans
|
(23,670
|
)
|
-
|
(23,670
|
)
|
|||||||
Warranty obligations
|
(1,059
|
)
|
(61
|
)
|
(1,120
|
)
|
||||||
Deferred tax liabilities, net
|
(2,271
|
)
|
-
|
(2,271
|
)
|
|||||||
Other non-current liabilities
|
(1,399
|
)
|
-
|
(1,399
|
)
|
|||||||
Total net tangible assets
|
$
|
37,956
|
$
|
7,237
|
$
|
45,193
|
||||||
Identifiable intangible assets (1):
|
||||||||||||
Technology
|
$
|
28,389
|
$
|
2,048
|
$
|
30,437
|
||||||
Customer relationships
|
3,007
|
810
|
3,817
|
|||||||||
Backlog
|
-
|
193
|
193
|
|||||||||
Tradename
|
3,671
|
-
|
3,671
|
|||||||||
Total identifiable intangible assets acquired
|
$
|
35,067
|
$
|
3,051
|
$
|
38,118
|
||||||
Goodwill (2)
|
$
|
31,663
|
$
|
2,782
|
$
|
34,445
|
||||||
Non-controlling interests
|
$
|
(22,159
|
)
|
-
|
$
|
(22,159
|
)
|
|||||
Total purchase price allocation
|
$
|
82,527
|
$
|
13,070
|
$
|
95,597
|
(1) |
Gamatronic's definite-lived intangible assets include current technology of $2,048 (7 years weighted-average useful life), customer relationships of $810 (7 years weighted-average useful life) and backlog of $193 (2 months weighted-average useful life.
|
NOTE 8:- |
BUSINESS COMBINATION (Cont.)
|
(2) |
The goodwill
resulted from the Gamatronic Acquisition
is attributable primarily to acquired technology, expected synergies and the assembled workforce from the UPS Division. The goodwill is expected to be deductible for income tax purposes over a period of 10 years.
|
Year ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Unaudited
|
||||||||
Revenue
|
$
|
976,827
|
$
|
671,570
|
||||
Net income
|
$
|
115,074
|
$
|
66,011
|
NOTE 9:- |
INTANGIBLE ASSETS AND GOODWILL
|
a. |
Intangible assets:
|
As of December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Intangible assets with finite lives:
|
||||||||||||
Current Technology
|
$
|
30,821
|
$
|
-
|
$
|
-
|
||||||
Customer relationships
|
3,857
|
-
|
-
|
|||||||||
Trade names
|
3,721
|
-
|
-
|
|||||||||
Patents
|
1,400
|
1,400
|
1,400
|
|||||||||
Backlog
|
193
|
-
|
-
|
|||||||||
Gross intangible assets
|
39,992
|
1,400
|
1,400
|
|||||||||
Less - accumulated amortization
|
(1,488
|
)
|
(285
|
)
|
(141
|
)
|
||||||
Total intangible assets, net
|
$
|
38,504
|
$
|
1,115
|
$
|
1,259
|
2019
|
$
|
4,673
|
||
2020
|
4,769
|
|||
2021
|
4,818
|
|||
2022
|
4,883
|
|||
2023
|
4,868
|
|||
2024 and thereafter
|
14,493
|
|||
$
|
38,504
|
NOTE 9:- |
INTANGIBLE ASSETS AND GOODWILL (Cont.)
|
b. |
Goodwill:
|
Total
|
||||
Goodwill at January 1, 2018
|
$
|
-
|
||
Business combinations
|
34,445
|
|||
Foreign currency translation
|
429
|
|||
Goodwill at December 31, 2018
|
$
|
34,874
|
NOTE 10:- |
ACCRUED EXPENSES AND OTHER ACCOUNTS PAYABLE
|
As of December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Accrued expenses
|
$
|
14,859
|
$
|
14,863
|
$
|
4,209
|
||||||
Government authorities
|
11,344
|
1,905
|
1,568
|
|||||||||
Loss provision related to contractual inventory purchase obligations and others*
|
3,525
|
3,610
|
2,871
|
|||||||||
$
|
29,728
|
$
|
20,378
|
$
|
8,648
|
NOTE 11:- |
BANK LOANS
|
Maturities calendar year
|
As of December 31, 2018
|
Effective interest rate*
|
||||||||
2019
|
$
|
15,919
|
0.60%-0.89%
|
|||||||
2020
|
2,430
|
0.68%-0.75%
|
||||||||
2018 - 2020
|
900
|
0.67%
|
||||||||
2016 - 2021
|
900
|
0.69%
|
||||||||
$
|
20,149
|
|||||||||
Less - current maturities bank loans
|
$
|
(16,639
|
)
|
|||||||
Long term bank loans net of Current maturities
|
$
|
3,510
|
NOTE 11:- |
BANK LOANS (Cont.)
|
NOTE 12:- |
WARRANTY OBLIGATIONS
|
December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Balance, at beginning of year
|
$
|
78,811
|
$
|
58,375
|
$
|
51,192
|
||||||
Additions and adjustments to cost of revenues
|
70,854
|
34,650
|
13,749
|
|||||||||
Usage and current warranty expenses
|
(27,839
|
)
|
(14,214
|
)
|
(6,566
|
)
|
||||||
Balance, at end of year
|
121,826
|
78,811
|
58,375
|
|||||||||
Less current portion
|
(28,868
|
)
|
(14,785
|
)
|
(13,616
|
)
|
||||||
Long term portion
|
$
|
92,958
|
$
|
64,026
|
$
|
44,759
|
As of December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Tax liabilities
|
$
|
7,147
|
$
|
16,840
|
$
|
2,061
|
||||||
Lease incentive obligations
|
1,468
|
1,765
|
-
|
|||||||||
Other
|
776
|
-
|
-
|
|||||||||
$
|
9,391
|
$
|
18,605
|
$
|
2,061
|
Unrealized losses on available-for-sale marketable securities
|
Unrealized gains on cash flow hedges
|
Unrealized gains losses on foreign currency translation
|
Total
|
|||||||||||||
Beginning balance
|
$
|
(433
|
)
|
$
|
-
|
$
|
(178
|
)
|
$
|
(611
|
)
|
|||||
Other comprehensive income (loss) before reclassifications
|
(360
|
)
|
31
|
310
|
(19
|
)
|
||||||||||
Loses (gains) reclassified from accumulated other comprehensive income
|
137
|
(31
|
)
|
-
|
106
|
|||||||||||
Net current period other comprehensive income (loss)
|
(223
|
)
|
-
|
310
|
87
|
|||||||||||
Ending balance
|
$
|
(656
|
)
|
$
|
-
|
$
|
132
|
$
|
(524
|
)
|
Unrealized losses on available-for-sale marketable securities
|
Unrealized gains on cash flow hedges
|
Unrealized losses on foreign currency translation
|
Total
|
|||||||||||||
Beginning balance
|
$
|
(136
|
)
|
$
|
19
|
$
|
(207
|
)
|
$
|
(324
|
)
|
|||||
Other comprehensive income (loss) before reclassifications
|
(297
|
)
|
975
|
29
|
707
|
|||||||||||
Gains reclassified from accumulated other comprehensive income
|
-
|
(994
|
)
|
-
|
(994
|
)
|
||||||||||
Net current period other comprehensive income (loss)
|
(297
|
)
|
(19
|
)
|
29
|
(287
|
)
|
|||||||||
Ending balance
|
$
|
(433
|
)
|
$
|
-
|
$
|
(178
|
)
|
$
|
(611
|
)
|
Unrealized gains (losses) on available-for-sale marketable securities
|
Unrealized gains on cash flow hedges
|
Unrealized losses on foreign currency translation
|
Total
|
|||||||||||||
Beginning balance
|
$
|
57
|
$
|
243
|
$
|
(29
|
)
|
$
|
271
|
|||||||
Other comprehensive income (loss) before reclassifications
|
(193
|
)
|
93
|
(178
|
)
|
(278
|
)
|
|||||||||
Gains reclassified from accumulated other comprehensive income
|
-
|
(317
|
)
|
-
|
(317
|
)
|
||||||||||
Net current period other comprehensive loss
|
(193
|
)
|
(224
|
)
|
(178
|
)
|
(595
|
)
|
||||||||
Ending balance
|
$
|
(136
|
)
|
$
|
19
|
$
|
(207
|
)
|
$
|
(324
|
)
|
Unrealized gains on available-for-sale marketable securities
|
Unrealized gains on cash flow hedges
|
Unrealized losses on foreign currency translation
|
Total
|
|||||||||||||
Beginning balance
|
$
|
-
|
$
|
-
|
$
|
(222
|
)
|
$
|
(222
|
)
|
||||||
Other comprehensive income (loss) before reclassifications
|
56
|
412
|
193
|
661
|
||||||||||||
Losses (gains) reclassified from accumulated other comprehensive income (loss)
|
1
|
(169
|
)
|
-
|
(168
|
)
|
||||||||||
Net current period other comprehensive income
|
57
|
243
|
193
|
493
|
||||||||||||
Ending balance
|
$
|
57
|
$
|
243
|
$
|
(29
|
)
|
$
|
271
|
Components
|
Amount Reclassified from
Accumulated Other Comprehensive Income (Loss) |
Affected Line Item in the Statements of Operations
|
|||||||||||||||
Year ended
December 31,
|
Six months
ended
December 31,
|
Year ended
June 30,
|
|||||||||||||||
2018
|
2017
|
2016
|
2016
|
||||||||||||||
Unrealized gains on cash flow hedges
|
$
|
3
|
$
|
166
|
$
|
47
|
$
|
30
|
Cost of revenues
|
||||||||
19
|
570
|
227
|
115
|
Research and development
|
|||||||||||||
5
|
151
|
58
|
33
|
Sales and marketing
|
|||||||||||||
4
|
153
|
46
|
24
|
General and administrative
|
|||||||||||||
31
|
1,040
|
378
|
202
|
Total, before income taxes
|
|||||||||||||
-
|
46
|
61
|
33
|
Income tax expenses
|
|||||||||||||
31
|
994
|
317
|
169
|
Total, net of income taxes
|
|||||||||||||
Unrealized losses on available-for-sale marketable securities
|
(137
|
)
|
-
|
-
|
(1
|
)
|
Financial income, net
|
||||||||||
-
|
-
|
-
|
-
|
Income tax expense
|
|||||||||||||
(137
|
)
|
-
|
-
|
(1
|
)
|
Total, net of income taxes
|
|||||||||||
Total reclassifications for the period
|
$
|
(106
|
)
|
$
|
994
|
$
|
317
|
$
|
168
|
Total, net of income taxes
|
NOTE 15:- |
COMMITMENTS AND CONTINGENT LIABILITIES
|
a. |
Lease commitments:
|
2019
|
6,933
|
|||
2020
|
4,677
|
|||
2021
|
2,633
|
|||
2022
|
2,380
|
|||
2023
|
2,350
|
|||
2024 and thereafter
|
2,444
|
|||
$
|
21,417
|
NOTE 15:- |
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
b. |
Guarantees:
|
c. |
Contractual purchase obligations:
|
d. |
Legal claims:
|
NOTE 15:- |
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
NOTE 16:- |
STOCK CAPITAL
|
a. |
Composition of common stock capital of the Company:
|
Number of shares
|
||||||||||||||||||||||||
Authorized
as of December 31,
|
Issued and outstanding
as of December 31,
|
|||||||||||||||||||||||
2018
|
2017
|
2016
|
2018
|
2017
|
2016
|
|||||||||||||||||||
Stock of $0.0001 par value:
|
||||||||||||||||||||||||
Common stock
|
125,000,000
|
125,000,000
|
125,000,000
|
46,052,802
|
43,812,601
|
41,259,391
|
b. |
Common stock rights:
|
c. |
Stock option plans:
|
NOTE 16:- |
STOCK CAPITAL (Cont.)
|
Weighted
|
||||||||||||||||
average
|
||||||||||||||||
Weighted
|
remaining
|
|||||||||||||||
Number
|
average
|
contractual
|
Aggregate
|
|||||||||||||
of
|
exercise
|
term
|
intrinsic
|
|||||||||||||
options
|
price
|
in years
|
Value
|
|||||||||||||
Outstanding as of December 31, 2017
|
3,524,310
|
7.40
|
6.35
|
106,251
|
||||||||||||
Granted
|
180,983
|
38.05
|
||||||||||||||
Exercised
|
(1,280,057
|
)
|
4.89
|
|||||||||||||
Forfeited or expired
|
(23,343
|
)
|
8.35
|
|||||||||||||
Outstanding as of December 31, 2018
|
2,401,893
|
11.04
|
6.19
|
58,323
|
||||||||||||
Vested and expected to vest as of December 31, 2018
|
2,359,484
|
10.94
|
6.17
|
57,520
|
||||||||||||
Exercisable as of December 31, 2018
|
1,843,014
|
7.93
|
5.64
|
50,173
|
NOTE 16:- |
STOCK CAPITAL (Cont.)
|
Options
|
Weighted
|
Options
|
Weighted
|
||||||||||||||
outstanding
|
average
|
exercisable
|
average
|
||||||||||||||
Range of
|
as of
|
remaining
|
as of
|
remaining
|
|||||||||||||
exercise
|
December 31,
|
contractual
|
December 31,
|
contractual
|
|||||||||||||
price
|
2018
|
Life in years
|
2018
|
Life in years
|
|||||||||||||
$0.87 – $1.50
|
22,236
|
0.57
|
22,236
|
0.57
|
|||||||||||||
$2.01 – $2.46
|
331,482
|
2.56
|
331,482
|
2.56
|
|||||||||||||
$3.03 – $5.01
|
1,080,892
|
5.86
|
1,043,120
|
5.86
|
|||||||||||||
$9.36
|
10,546
|
6.08
|
10,098
|
6.08
|
|||||||||||||
$13.70 – $14.85
|
426,181
|
8.14
|
180,479
|
8.14
|
|||||||||||||
$15.34 – $17.14
|
183,623
|
7.66
|
100,571
|
7.66
|
|||||||||||||
$20.81 – $25.09
|
165,950
|
6.68
|
121,100
|
6.68
|
|||||||||||||
$38.05
|
180,983
|
9.01
|
33,928
|
9.01
|
|||||||||||||
2,401,893
|
6.19
|
1,843,014
|
5.64
|
No. of
RSUs
|
Weighted average
grant date
fair value
|
|||||||
Unvested as of January 1, 2018
|
2,087,992
|
24.33
|
||||||
Granted
|
1,744,621
|
41.45
|
||||||
Vested
|
(811,376
|
)
|
24.97
|
|||||
Forfeited
|
(214,005
|
)
|
29.36
|
|||||
Unvested as of December 31, 2018
|
2,807,232
|
34.40
|
NOTE 16:- |
STOCK CAPITAL (Cont.)
|
Options & RSU’s
|
|||||||||||||
outstanding
|
Range
|
Exercisable
|
|||||||||||
as of
|
of
|
as of
|
|||||||||||
Issuance
|
December 31,
|
Exercise
|
December 31,
|
Exercisable
|
|||||||||
Date
|
2018
|
price
|
2018
|
Through
|
|||||||||
2014
|
6,478
|
$3.51 - $5.01
|
4,923
|
October 29, 2024
|
|||||||||
2015
|
5,918
|
$0
|
-
|
||||||||||
2016
|
7,126
|
$0 - $15.34
|
-
|
September 21, 2026
|
|||||||||
2017
|
18,626
|
$0 - $13.70
|
-
|
March 15, 2027
|
|||||||||
2018
|
20,783
|
$0
|
-
|
||||||||||
58,931
|
4,923
|
d. |
Employee Stock Purchase Plan (“ESPP”):
|
NOTE 16:- |
STOCK CAPITAL (Cont.)
|
e. |
Stock-based compensation expense for employees and non-employee consultants:
|
Year ended December 31,
|
Six months ended
December 31,
|
Year ended
June 30,
|
||||||||||||||
2018
|
2017
|
2016
|
2016
|
|||||||||||||
Cost of revenues
|
$
|
4,343
|
$
|
2,250
|
$
|
871
|
$
|
945
|
||||||||
Research and development, net
|
11,205
|
5,703
|
2,061
|
2,364
|
||||||||||||
Selling and marketing
|
9,111
|
5,387
|
1,852
|
2,915
|
||||||||||||
General and administrative
|
5,959
|
4,224
|
1,816
|
2,820
|
||||||||||||
Total stock-based compensation expense
|
$
|
30,618
|
$
|
17,564
|
$
|
6,600
|
$
|
9,044
|
a. |
Tax rates in U.S:
|
b. |
Kokam is subject to Korean tax on progressive tax rates of up to 22%.
|
c. |
Corporate tax in Israel:
|
d. |
Carryforward tax losses:
|
e. |
Deferred income taxes:
|
December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Deferred tax assets, net:
|
||||||||||||
Research and Development carryforward expenses
|
$
|
9,482
|
$
|
5,380
|
$
|
908
|
||||||
Carryforward tax losses
|
4,155
|
-
|
-
|
|||||||||
Stock based compensation expenses
|
3,160
|
1,622
|
1,039
|
|||||||||
Inventory Impairment
|
1,471
|
-
|
-
|
|||||||||
Allowance and other reserves
|
4,340
|
1,338
|
868
|
|||||||||
Total deferred tax assets, net
|
$
|
22,608
|
$
|
8,340
|
$
|
2,815
|
||||||
Deferred tax liabilities, net:
|
||||||||||||
Purchase price allocation adjustments
|
(9,408
|
)
|
-
|
-
|
||||||||
Total deferred tax liabilities, net
|
$
|
(9,408
|
)
|
$
|
-
|
$
|
-
|
|||||
Recorded as:
|
||||||||||||
Deferred tax assets, net
|
$
|
14,699
|
$
|
8,340
|
$
|
2,815
|
||||||
Deferred tax liabilities, net
|
(1,499
|
)
|
-
|
-
|
||||||||
Net deferred tax assets
|
$
|
13,200
|
$
|
8,340
|
$
|
2,815
|
f. |
Uncertain tax positions:
|
|
December 31,
|
|||||||||||
2018
|
2017
|
2016
|
||||||||||
Balance at January 1,
|
$
|
579
|
$
|
249
|
$
|
-
|
||||||
Increases related to current year tax positions
|
8,499
|
330
|
249
|
|||||||||
Decreases related to prior year tax positions
|
(579
|
)
|
-
|
-
|
||||||||
Balance at December 31,
|
$
|
8,499
|
$
|
579
|
$
|
249
|
g. |
Income before taxes are comprised as follows:
|
Year ended December 31,
|
Six months
ended
December 31,
|
Year ended
June 30,
|
||||||||||||||
2018
|
2017
|
2016
|
2016
|
|||||||||||||
Domestic
|
$
|
13,405
|
$
|
7,461
|
$
|
3,165
|
$
|
3,758
|
||||||||
Foreign
|
123,718
|
92,783
|
27,433
|
68,472
|
||||||||||||
$
|
137,123
|
$
|
100,244
|
$
|
30,598
|
$
|
72,230
|
h. |
Taxes on income (tax benefit) are comprised as follows:
|
Year ended December 31,
|
Six months
ended
December 31,
|
Year ended
June 30,
|
||||||||||||||
2018
|
2017
|
2016
|
2016
|
|||||||||||||
Current taxes:
|
||||||||||||||||
U.S. Federal & State
|
$
|
13,894
|
$
|
19,889
|
$
|
1,047
|
$
|
1,737
|
||||||||
Foreign
|
2,276
|
1,639
|
518
|
263
|
||||||||||||
Total current taxes
|
16,170
|
21,528
|
1,565
|
2,000
|
||||||||||||
Deferred taxes:
|
||||||||||||||||
U.S. Federal & State
|
(1,284
|
)
|
(42
|
)
|
507
|
(1,380
|
)
|
|||||||||
Foreign
|
(5,809
|
)
|
(5,414
|
)
|
3,145
|
(4,999
|
)
|
|||||||||
Total deferred taxes
|
(7,093
|
)
|
(5,456
|
)
|
3,652
|
(6,379
|
)
|
|||||||||
Income taxes, net
|
$
|
9,077
|
$
|
16,072
|
$
|
5,217
|
$
|
(4,379
|
)
|
i. |
Reconciliation of theoretical tax expense to actual tax expense:
|
Year ended December 31,
|
Six months
ended
December 31,
|
Year ended
June 30,
|
||||||||||||||
2018
|
2017
|
2016
|
2016
|
|||||||||||||
Income before taxes, as reported in the consolidated statements of operations
|
$
|
137,123
|
$
|
100,244
|
$
|
30,598
|
$
|
72,230
|
||||||||
Statutory tax rate
|
21
|
%
|
34
|
%
|
34
|
%
|
34
|
%
|
||||||||
Theoretical tax benefits on the above amount at the US statutory tax rate
|
28,796
|
34,083
|
10,403
|
24,558
|
||||||||||||
Income tax at rate other than the U.S. statutory tax rate
|
(26,861
|
)
|
(34,734
|
)
|
(5,396
|
)
|
(30,229
|
)
|
||||||||
Tax Cuts and Jobs Act of 2017
|
8,062
|
18,735
|
-
|
-
|
||||||||||||
Non-deductible expenses
|
(644
|
)
|
(1,545
|
)
|
164
|
1,514
|
||||||||||
Other individually immaterial income tax items, net
|
(276
|
)
|
(467
|
)
|
46
|
(222
|
)
|
|||||||||
Actual tax expense (tax benefit)
|
$
|
9,077
|
$
|
16,072
|
$
|
5,217
|
$
|
(4,379
|
)
|
j. |
Tax assessments:
|
k. |
Tax benefits for Israeli companies under the Law for the Encouragement of Capital Investments, 1959 (the “Investments Law”):
|
l. |
Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969:
|
NOTE 18:- |
FINANCIAL EXPENSES (INCOME), NET
|
Year ended
December 31,
|
Six months
ended
December 31,
|
Year ended
June 30,
|
||||||||||||||
2018
|
2017
|
2016
|
2016
|
|||||||||||||
Interest income on marketable securities
|
$
|
(5,629
|
)
|
$
|
(4,398
|
)
|
$
|
(1,504
|
)
|
$
|
(1,112
|
)
|
||||
Exchange rate loss (income), net
|
4,725
|
(8,111
|
)
|
3,521
|
(27
|
)
|
||||||||||
Interest expenses
|
2,536
|
-
|
-
|
-
|
||||||||||||
Amortization of marketable securities premium and accretion of discount, net
|
1,242
|
2,017
|
685
|
532
|
||||||||||||
Expenses (income), net, related to hedging transactions
|
(698
|
)
|
1,334
|
87
|
136
|
|||||||||||
Other financial expenses, net
|
121
|
-
|
-
|
-
|
||||||||||||
$
|
2,297
|
$
|
(9,158
|
)
|
$
|
2,789
|
$
|
(471
|
)
|
NOTE 19:- |
SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION
|
a. |
Segment Information:
|
As of December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Solar
|
$
|
866,868
|
$
|
641,305
|
$
|
424,743
|
||||||
Non-Solar
|
97,604
|
-
|
-
|
|||||||||
Total assets
|
$
|
964,472
|
$
|
641,305
|
$
|
424,743
|
b. |
Geographic Information:
|
Year ended December 31,
|
Six months
ended
December 31,
|
Year ended
June 30,
|
||||||||||||||
2018
|
2017
|
2016
|
2016
|
|||||||||||||
Revenues based on Customers’ location:
|
||||||||||||||||
United States
|
$
|
505,469
|
$
|
348,949
|
$
|
160,321
|
$
|
334,260
|
||||||||
Europe (*)
|
175,894
|
128,295
|
37,500
|
74,830
|
||||||||||||
Netherlands
|
123,959
|
70,067
|
23,099
|
36,377
|
||||||||||||
Rest of the world
|
131,915
|
59,734
|
19,077
|
44,376
|
||||||||||||
Total revenues
|
$
|
937,237
|
$
|
607,045
|
$
|
239,997
|
$
|
489,843
|
c. |
Major Customers:
|
Year ended December 31,
|
Six months
ended
December 31,
|
Year ended
June 30,
|
||||||||||||||
2018
|
2017
|
2016
|
2016
|
|||||||||||||
Customer A
|
19.4
|
%
|
14.8
|
%
|
11.2
|
%
|
11.6
|
%
|
||||||||
Customer B
|
6.8
|
%
|
8.1
|
%
|
8.4
|
%
|
10.1
|
%
|
||||||||
Customer C
|
-
|
3.0
|
%
|
8.7
|
%
|
10.9
|
%
|
d. |
Products:
|
Year ended December 31,
|
Six months
ended
December 31,
|
Year ended
June 30,
|
||||||||||||||
2018
|
2017
|
2016
|
2016
|
|||||||||||||
Inverters
|
$
|
416,966
|
$
|
290,632
|
$
|
112,585
|
$
|
223,756
|
||||||||
Optimizers
|
432,410
|
286,856
|
115,229
|
244,852
|
||||||||||||
Others
|
87,861
|
29,557
|
12,183
|
21,235
|
||||||||||||
Total revenues
|
$
|
937,237
|
$
|
607,045
|
$
|
239,997
|
$
|
489,843
|
NOTE 19:- |
SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION (Cont.)
|
e. |
Long-lived assets by geographic region:
|
As of December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Israel
|
$
|
59,126
|
$
|
43,273
|
$
|
35,055
|
||||||
Korea
|
41,268
|
-
|
-
|
|||||||||
China
|
10,433
|
5,985
|
36
|
|||||||||
Europe
|
6,600
|
1,219
|
466
|
|||||||||
U.S.
|
1,369
|
567
|
515
|
|||||||||
Other
|
533
|
138
|
50
|
|||||||||
Total long-lived assets*
|
$
|
119,329
|
$
|
51,182
|
$
|
36,122
|
NOTE 20:- |
SUBSEQUENT EVENTS
|
SOLAREDGE TECHNOLOGIES, INC.
|
||
By:
|
/s/ Guy Sella
|
|
Name: Guy Sella
|
||
Title: Chief Executive Officer and Chairman
|
||
Date:
|
February 28, 2019
|
Signature
|
Title
|
Date
|
/s/Guy Sella
Guy Sella |
Chief Executive Officer and Chairman
( Principal Executive Officer ) |
February 28, 2019
|
/s/Ronen Faier
Ronen Faier |
Chief Financial Officer
( Principal Financial and Accounting Officer ) |
February 28, 2019
|
/s/Dan Avida
Dan Avida |
Director
|
February 28, 2019
|
/s/Yoni Cheifetz
Yoni Cheifetz |
Director
|
February 28, 2019
|
/s/Marcel Gani
Marcel Gani |
Director
|
February 28, 2019
|
/s/Doron Inbar
Doron Inbar |
Director
|
February 28, 2019
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/s/Avery More
Avery More |
Director
|
February 28, 2019
|
/s/Tal Payne
Tal Payne |
Director
|
February 28, 2019
|
EXHIBIT 10.16
SHARE PURCHASE AGREEMENT
October [*], 2018
TABLE OF CONTENTS
Schedule 1 | Contact Details |
Schedule 4 | Representations and Warranties of the Seller Relating to the Company |
Schedule 5.5 | Purchaser Governmental Approvals |
Schedule 6.7 | Consents and Notices |
Schedule 6.9 | Resigning Officers and Directors |
Disclosure Schedule | |
Exhibit A | Form of Resignation, Waiver and Release Letter for Resigning Officers and Directors |
Exhibit B | Amended and Restated Articles of Incorporation of the Company |
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this “ Agreement ”) is entered into on October [*], 2018 by and among:
(1) | Ji Jun Hong, a citizen of the Republic of Korea (“Korea”) residing at ______ (“ Chairman Hong ” or the “ Seller ”); and |
(2) | SolarEdge Technologies Korea Co., Ltd., a company incorporated under the laws of Korea, having its principal office at 3-307, 308, Office A, 17 Worldcupbuk-ro 54gil, Mapo-gu, Seoul, Korea (the “ Purchaser ”). |
The Seller and the Purchaser shall hereinafter be referred to individually as a “ Party ” and collectively as “ Parties ” as the context may require.
RECITALS
WHEREAS , the Seller owns 4,887,596 shares of common stock of Kokam Co., Ltd., a joint stock company ( chusik hoesa in Korean) duly organized and existing under the Laws of Korea with its registered office at 30-78 1220 Beongil Gyeongsu-Daero, Jangan-gu, Suwon-si, Gyeonggi-do, Korea (the “ Company ”), representing 32.19% of the total issued and outstanding capital stock of the Company (the “ Sale Shares ”); and
WHEREAS , in accordance with the terms and conditions of this Agreement, the Seller desires to sell and transfer the Sale Shares owned by it to the Purchaser, and the Purchaser desires to purchase such Sale Shares from the Seller.
NOW, THEREFORE , in consideration of the premises and of the mutual representations, warranties and covenants herein contained, the Parties hereby agree as follows:
1.1 Defined Terms . As used in this Agreement, the following terms shall have the respective meanings set forth below:
“ Action ” means any action, litigation, lawsuit, arbitration, appeal, petition, proceeding, complaint, charge, allegation, claim, suit, mediation, hearing, or investigation by or before any Governmental Authority or inquiry or investigation by any Governmental Authority.
“ Affiliate ” means, with respect to any Person, any other Person who (at the time when the determination is to be made), directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the specified Person.
“ Agreement ” has the meaning set forth in the preamble of this Agreement, and shall include all Schedules and Exhibits.
“ Assets ” has the meaning set forth in Section 4.10 of Schedule 4 .
“ Business ” means the business and operations of the Company or the Company Subsidiary as conducted and as proposed to be conducted as of the date hereof.
“ Business Day ” means any day on which commercial banks are open for business in Seoul, Tel Aviv and New York.
“ Chechen Project ” means a certain project conducted by the Company and completed in 2016 involving sale of battery pack assembly machinery in Chechen Republic.
“ Closing ” has the meaning set forth in Article 2.4.
“ Closing Date ” means the date on which the Closing occurs.
“ Company ” has the meaning set forth in the first recital of this Agreement.
“ Company Subsidiary ” means Kokam Electronics Co., Ltd.
“ Competing Activities ” has the meaning set forth in Article 6.8(a).
“ Contract ” means any contract, agreement, indenture, note, bond, loan or credit agreement, instrument, lease, mortgage, deed of trust, license, commitment or other arrangement, agreement or obligation, whether written or oral.
“ Control ” (including, with correlative meanings, the terms “ Controlled by ” and “ under common Control with ”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or partnership or other ownership interests, by contract or otherwise.
“ Corporate Sellers ” means Gyeonggi KT Green Growth Investment Association, Korea Investment Partners Venture Association No. 11, Korea Investment Partners Co., Ltd., Korean Investment Growth Capital Fund No. 17, KoFC Skylake Global Incuvest 4 Private Equity Fund 0901 Co., Ltd., Skylake Growth Champ 2010 5 PEF, IMM Green Tech Fund, IMM Investment 2 nd Private Equity Inc., Mirae Asset Venture Investment Co., Ltd., Atinum Investment Co., Ltd., Leading Investment & Securities Co., Ltd., and E-Revolution Private Equity Fund No. 1.
“ Disclosed ” means matters disclosed in the Disclosure Schedule ; provided that nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, unless the Disclosure Schedule identifies the exception and describes the relevant facts and, without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty pertains to the existence of the document or other item itself); provided, further that, the Disclosure Schedule will be arranged in paragraphs corresponding to the lettered or numbered paragraphs contained in the relevant provisions of this Agreement.
“ Disclosure Schedule ” means the disclosure schedule (including the updated Section 4.19(a) of the Disclosure Schedule in accordance with Section 4.19(a) of Schedule 4 which shall be executed and delivered by the Seller to the Purchaser in form satisfactory to the Purchaser) in respect of Articles 3 and 4 of this Agreement, attached hereto.
“ Elcom ” means Elcom Co., Ltd.
“ Employee Benefit Plan ” means any bonus, overtime and night-time (and compensation therefor), days-off, vacation and leave (and compensation for unused days-off, vacation or leave), deferred compensation, severance, termination payment, pension, profit sharing, stock option, Employee stock purchase or other Employee benefit plans, program, agreement, arrangement, fund, policies and rules applicable to a the Company.
“ Employees ” has the meaning set forth in Section 4.14(a) of Schedule 4 .
“ Encumbrance ” means any liens, charges, encumbrances, security interests, easement, license, option, claim, pledge, mortgage, proxy, right of first refusal, voting trusts or agreements, restriction on title, use, receipt of income, voting sale, disposition, transfer or exercise of any other attribute of ownership, and other equities or third party rights of any nature whatsoever.
“ Environmental Law ” means any Law in Korea relating to pollution or protection of the environment, health, hygiene or safety, worker’s health, including such Laws relating to the use, handling, transportation, treatment, storage, disposal, emission, release or discharge of hazardous materials.
“ ERBSA ” has the meaning set forth in Section 4.15(b) of Schedule 4 .
“ Escrow Account ” means the account to be established with the Escrow Agent in accordance with the Escrow Agreement.
“ Escrow Amount ” means KRW 8,300,000,000.
“ Escrow Agent ” means the escrow agent as mutually agreed by the Parties.
“ Escrow Agreement ” means an escrow agreement to be entered into on or after the date of this Agreement between the Purchaser, the Seller and the Escrow Agent in form and substance satisfactory to the parties thereto.
“ Final Determination ” means the occurrence of any of the following: (i) the parties to the dispute have reached a final settlement agreement in writing with respect to all claims and damages, (ii) a Governmental Authority of competent jurisdiction shall have entered a final and non-appealable order or judgment, or (iii) an arbitration or like panel shall have rendered a final determination or award with respect to disputes the parties have agreed to submit thereto.
“ Financial Statements ” means (i) the consolidated audited balance sheets of the Company as of December 31, 2017 and the related audited statements of income, changes in shareholders’ equity and cash flows for the year then ended, and (ii) the consolidated unaudited balance sheet of the Company as of June 30, 2018, and the related unaudited statements of income and cash flows as of June 30, 2018.
“ Government Official ” means any official or employee of any Governmental Authority, or any person acting in an official capacity on behalf of such government, instrumentality or public international organization, or any political party or official thereof, or any candidate for political office.
“ Governmental Approvals ” means any approval, authorization, consent, order, license, permit, certification qualification, exemption, registration, designation, declaration, filing, waiver or other authorization, issued, granted, given or otherwise made available by or under the authority of any Governmental Authority.
“ Governmental Authority ” means any government, state or political subdivision thereof, national or supranational body, court, tribunal or any person or body exercising executive, legislative, judicial, regulatory or administrative functions on behalf of any of them and includes all relevant securities commissions, stock exchange authorities, foreign exchange authorities, foreign investment authorities and similar entities or authorities.
“ Indebtedness ” has the meaning set forth in Article 6.3(f).
“ Indemnified Party ” means the Seller Indemnified Party or a Purchaser Indemnified Party, as the case may be.
“ Indemnifying Party ” has the meaning set forth in Article 8.4(a).
“ Intellectual Property ” means, collectively, all intellectual property and other similar proprietary rights in any jurisdiction or under any international convention, whether owned or held for use under license, whether registered or unregistered, including without limitation such rights in and to: (i) all patents and applications therefore, including all continuations, divisionals, continuations-in-part, and provisionals and patents issuing thereon, and all reissues, reexaminations, substitutions, renewals and extensions therefore, and inventions, invention disclosures, discoveries and improvements, whether or not patentable, (ii) all trademarks, service marks, trade names, brand names, trade dress rights, logos, slogans, corporate names and other source or business identifiers, Internet domain names and general intangibles of a like nature, together with the goodwill associated with any of the foregoing, and all applications, registrations, renewals and extensions thereof, (iii) all copyrights, copyrightable works, works of authorship and moral rights, and all registrations, applications, renewals, extensions and reversions thereof, (iv) all trade secrets (including know-how, recipes, formulae, manufacturing and production processes and techniques, technical data, designs, drawings and specifications), all trade secret rights in any information, formula, pattern, compilation, program, device, method, technique, or process and market and other data, and rights to limit the use or disclosure of any of the foregoing by any Person, (v) all material Software related to the business of the Company (including data and related documentation), (vi) all other intellectual property or proprietary rights in Technology and other proprietary or confidential information, including customer lists, supplier lists, pricing and cost information, and business and marketing plans and proposals, and (vii) all claims, causes of action and defenses relating to the enforcement of any of the foregoing used or held for use by or for the Company.
“ Interested Party ” has the meaning set forth in Section 4.20 of Schedule 4 .
“ Interested Party Transaction ” has the meaning set forth in Section 4.20 of Schedule 4 .
“ Israel ” means the State of Israel.
“ IT System ” means all computer systems, servers, network equipment and other computer hardware owned, leased or licensed by the Company.
“ Key Executive ” means each of Chairman Hong, Choong-Yeon Chong, Young-Jae Lee and Seong-Tae Ko.
“ Knowledge of Seller ” means the actual knowledge of any Key Executive, after due inquiry.
“ K-IFRS ” means the Korean International Financial Reporting Standards as amended from time to time.
“ Korea ” means the Republic of Korea.
“ Korean Won ” or “ KRW ” means the lawful currency of Korea.
“ Law ” means any constitution, law, legislation, treaty, statute, ordinance, code, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Authority having competent jurisdiction.
“ Lease Deposit ” has the meaning set forth in Section 4.11(b) of Schedule 4 .
“ Leased Real Property ” has the meaning set forth in Section 4.11(e) of Schedule 4 .
“ Leases ” has the meaning set forth in Section 4.11(b) of Schedule 4 .
“ Licensed Intellectual Property ” has the meaning set forth in Section 4.12(a) of Schedule 4 .
“ Losses ” has the meaning set forth in Article 8.1(a).
“ Material Adverse Effect (or Change) ” means any circumstance, change, development, event, condition, occurrence, effect or state of facts that, individually or in the aggregate, may be materially adverse or would reasonably be expected to be materially adverse to the business, assets (including intangible assets), liabilities, or financial condition of the Company taken as a whole. Notwithstanding the foregoing, no circumstance, change, development, event, condition, occurrence, effect or state of facts will be deemed to be a Material Adverse Effect (or Change) if (a) it generally affects the industry in which the Company operates, (b) it is the result of any changes to K-IFRS or accounting standards or principles or any change in applicable Laws or the interpretation thereof, (c) it is caused by any and all changes in general economic or political conditions, or (d) it is the result of the execution of this Agreement or the public announcement of the Transaction.
“ Material Contracts ” has the meaning set forth in Section 4.9(c) of Schedule 4 .
“ Order ” means any judgment, award, decree, ruling or any other order of any Governmental Authority.
“ Ordinary Course of Business ” means an action taken by a Person only if: (a) such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person in compliance with applicable Laws; (b) such action is not required to be authorized by the board of directors of such Person similar in nature and magnitude to actions customarily taken in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.
“ Organizational Documents ” means the articles of incorporation, bylaws, regulations concerning the board resolutions, corporate registry and other similar documents, instruments or certificates executed, adopted or filed in connection with the creation, formation or organization of a Person, including any amendments thereto.
“ Owned Intellectual Property ” has the meaning set forth in Section 4.12(a) of Schedule 4 .
“ Owned Real Property ” has the meaning set forth in Section 4.11(e) of Schedule 4 .
“ Party ” or “ Parties ” has the meaning set forth in the preamble of this Agreement.
“ Person ” means any individual, partnership, private equity fund, limited liability company, corporation, association, joint stock company, trust, entity, joint venture, labor organization, unincorporated organization, or Governmental Authority.
“ Purchase Price ” has the meaning set forth in Article 2.2(a).
“ Purchaser ” has the meaning set forth in the preamble of this Agreement.
“ Purchaser Indemnified Parties ” has the meaning set forth in Article 8.1(a).
“ Relevant Companies ” means the Company and the Company Subsidiary.
“ Representatives ” means, in respect of a Person other than an individual, any of the current partners, owners, shareholders, directors, executives, officers, representatives, members, agents or employees, advisors or representatives.
“ Resigning Officers and Directors ” means those directors of the Company and officers of the Company, each of whom is listed in Schedule 6.9 , who are to resign pursuant to Article 6.9.
“ Sale Shares ” has the meaning set forth in the first recital of this Agreement.
“ Seller ” has the meaning set forth in the preamble of this Agreement.
“ Seller Bank Account ” means the bank account into which the Purchase Price is to be deposited pursuant to Article 2.2(a), as notified by the Seller to the Purchaser in writing at least five Business Days prior to the Closing.
“ Seller Indemnifiable Claims ” means any Actions, injunctions, judgments, orders, decrees, rulings, damages, decreases in value, penalties, fines, amounts paid in settlement, Liabilities, losses, expenses and costs of defense, including, without limitation, attorneys’ fees and expenses, whether or not involving a third party claim for which the Seller is responsible or otherwise liable hereunder.
“ Seller Indemnified Party ” has the meaning set forth in Article 8.2.
“ Service Agreement ” means the service agreement to be entered into on or about the date of this Agreement between the Purchaser and kamur partners co., ltd.
“ Shared Intellectual Property ” has the meaning set forth in Section 4.12(b) of Schedule 4 .
“ Software ” means (a) any and all computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code and (b) any and all available documentation, including user manuals and other training documentation, related to any of the foregoing.
“ Subsidiary ” when used with respect to any Party, shall mean any corporation, limited liability company, partnership, association, trust or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power (or, in the case of a partnership, more than 50% of the general partnership interests) are, as of such date, owned by such Party or one or more Subsidiaries of such party or by such party and one or more Subsidiaries of such party.
“ Tax ” means all forms of taxation whether direct or indirect and whether levied by reference to income, profits, gains, revenues, net wealth, asset values, turnover, added value, withholding, local or other reference and statutory, governmental, state, provincial, local or foreign governmental or municipal impositions, duties, contributions, rates and levies (including social security contributions and any other payroll taxes), whenever and wherever imposed (whether imposed by way of a withholding or deduction for or on account of tax or otherwise) and in respect of any Person and all penalties, fines, charges, costs and interest relating thereto.
“ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“ Technology ” means all Software, information, designs, formulae, patterns, algorithms, procedures, methods, techniques, ideas, know-how, discoveries, concepts, research and development, technical data, compilations, compositions, programs, subroutines, tools, databases, materials, specifications, processes, inventions (whether patentable, or unpatentable and whether or not reduced to practice), devices, apparatus, creations, improvements, works of authorship and other similar materials, and all recordings, graphs, drawings, reports, analyses and other writings, and other tangible embodiments of the foregoing, in any form whether or not specifically listed herein, and all related technology, documentation and other materials used in, incorporated in, embodied in or displayed by any of the foregoing, or used or useful in the design, development, reproduction, maintenance or modification of any of the foregoing.
“ Transaction ” means the transaction contemplated hereby, including the sale and purchase of the Sale Shares under this Agreement.
“ U.S. ” means the United States of America.
1.2 | Construction and Interpretation . |
(a) | Every part of this Agreement shall be deemed to be supplementary and complementary with every other part of this Agreement and shall be read with and construed as a whole as much as practical. This Agreement has been fully reviewed and negotiated by the Parties and in interpreting this Agreement, no weight shall be placed upon which Party or its legal advisor drafted the provision being interpreted. |
(b) | Any reference to any documents (including this Agreement) shall be construed as references to that document as it may be modified, amended, supplemented from time to time. Any reference to any law shall include all statutory and administrative provisions consolidating or amending or replacing such law, and shall include all rules and regulations promulgated therein. |
(c) | Unless the context otherwise requires, (i) a term has the meaning assigned to it by this Agreement, (ii) the gender of all words used in this Agreement shall include the masculine, feminine, and neuter, (iii) the word “including” shall mean “including, but not limited to”, (iv) terms defined in the singular shall have the corresponding meaning in the plural, and vice versa, (v) all references herein to Articles, Sections, Schedules and Exhibits shall refer to articles, sections, schedules and exhibits, respectively, of this Agreement, and (vi) all captions and headings to Articles and Sections of this Agreement have been inserted for identification and reference purposes only and shall not be used to construe or interpret this Agreement. |
2.1 Purchase and Sale . Subject to the terms and conditions contained herein (including the exhibits and schedules attached hereto) the Seller shall sell and transfer to the Purchaser the Sale Shares and the Purchaser shall purchase from the Seller, the Sale Shares, free and clear of any Encumbrance on the Closing Date, provided that the Closing shall only take place upon the contemporaneous closing of the sale and purchase of shares from other shareholders in the Company representing 11,309,718 shares of the Company.
2.2 Purchase Price .
(a) | Subject to Article 2.3, the Purchaser shall pay the purchase price in the amount of KRW 37,782,724,516 (the “ Purchase Price ”) less the Escrow Amount on the Closing Date to the Seller by wire transfer of immediately available funds to the Seller Bank Account. |
(b) | Upon payment of the Purchase Price in accordance with Paragraph (a) in this Article 2.2, the Seller acknowledges and agrees that the Purchaser shall be deemed to have fulfilled its payment obligations to the Seller under this Article 2.2. |
2.3 Escrow. Subject to Article 10.7, the Purchaser shall deposit an amount equal to the Escrow Amount into the Escrow Account as security for any Seller Indemnifiable Claims in accordance with the Escrow Agreement. The Parties shall procure that the Escrow Amount is released and be transferred by the Escrow Agent to the Seller as follows.
(a) | First Escrow Release . On the first anniversary of the Closing Date (the “ First Escrow Release Date ”), the Purchaser shall release and pay 50% of the Escrow Amount by wire transfer of immediately available funds to the Seller Bank Account, less the aggregate amount, if any, of amounts previously deducted from the Escrow Amount by the Purchaser in accordance with this Agreement to satisfy any Seller Indemnifiable Claims. |
(b) | Second Escrow Release . On the second anniversary of the Closing Date, the Purchaser shall release and pay 50% of the Escrow Amount by wire transfer of immediately available funds to the Seller Bank Account, less the aggregate amount, if any, of amounts previously deducted from the Escrow Amount by the Purchaser in accordance with this Agreement to satisfy any Seller Indemnifiable Claims from the First Escrow Release Date. |
2.4 Closing . Subject to the satisfaction of each condition precedent set out in Article 7 or waiver in writing of such condition precedent by the Purchaser or the Seller, as applicable, the closing of the sale and purchase of the Sale Shares (the “ Closing ”) shall take place at the office of Shin & Kim, commencing at 10:00 a.m. Seoul time within ten (10) Business Days following the satisfaction or waiver in writing of the conditions precedent set out in Article 7, or such other date and time as the Seller and the Purchaser shall agree in writing.
2.5 Deliveries at Closing . At the Closing, simultaneously with the payment by the Purchaser of the sum prescribed under Article 2.2, the Seller shall deliver to the Purchaser:
(a) | the title to the Sale Shares and all rights attaching to them by effecting a book entry transfer to the Purchaser’s securities account, the details of which shall be notified to the Seller by the Purchaser at least five Business Days prior to the Closing; |
(b) | an extract of the shareholders’ registry of the Company duly certified as true and correct by the representative director of the Company evidencing the Purchaser as the registered owner of the Sale Shares; |
(c) | a receipt for the Purchase Price; |
(d) | an original counterpart or a certified copy of each document set out in Articles 7.3(e) and (g); and |
(e) | such other documents, instruments and materials reasonably requested by the Purchaser, including all of the documents required to be delivered under this Agreement. |
ARTICLE 3
SELLER REPRESENTATIONS AND WARRANTIES
RELATING TO HIM
The Seller hereby represents and warrants to the Purchaser that the statements contained in this Article 3 are true and accurate as of the date hereof and as of the Closing Date (or, if made as of a date specified below, as of such date) with respect to himself.
3.1 Citizenship and Residence . The Seller is a citizen and resident of Korea.
3.2 Authorization . The Seller has full authority and capacity to execute and deliver this Agreement and to perform its obligations hereunder and all actions required to authorize the execution and performance of all obligations of it under this Agreement and any other agreements and documents to which it is a party and the execution of which is contemplated hereunder have been duly taken. This Agreement has been duly executed and delivered by the Seller, and this Agreement constitutes the legal, valid and binding obligation of it enforceable against it in accordance with its terms.
3.3 Absence of Conflicts . The execution, delivery and performance by him of this Agreement will not: (i) violate any applicable Law or Government Approval applicable to it, or (ii) violate or conflict with, or constitute (with due notice or lapse of time or both) a default under, any agreement or instrument to which the Seller is a party or by which the Seller is bound.
3.4 No Proceeding . There is no Action pending or, to the Knowledge of Seller, threatened against the Seller, at law or in equity, that (i) involves, or could adversely affect, the Sale Shares or his rights thereto or (ii) may have the effect of preventing, delaying, or making illegal the consummation of the Transaction.
3.5 The Sale Shares . It is the record and beneficial owner of, owns, and has good and marketable title to and the legal right and power to sell and deliver, the Sale Shares, free and clear of any Encumbrances. The Sale Shares owned by it are not subject to any put option, tag-along or co-sale right or any similar option or right. Such Sale Shares have been duly authorized, are validly issued, fully paid and non-assessable. It is not a party to any shareholder agreement, voting agreement, subscription agreement, or repurchase or redemption agreement with respect to the Sale Shares owned by it, or any other contract pertaining to the payment of dividends, preemptive rights, capital contributions, director nomination, drag-along, anti-dilution, registration rights, rights of first refusal or other transfer restrictions, or any other rights or obligations with respect to the Sale Shares owned by it.
3.6 Government Approval . No Governmental Approval is required to be obtained by it under the relevant Law in connection with the execution, delivery and performance of this Agreement at or prior to the Closing Date.
3.7 Third Party Consent . The execution, delivery and performance by it of this Agreement and the consummation of the Transaction do not and will not require any consent, approval or action by or notification to any Person.
ARTICLE 4
SELLER REPRESENTATIONS AND WARRANTIES
RELATING TO THE COMPANY
The Seller hereby represents and warrants to the Purchaser that the statements contained in Schedule 4 are true and accurate as of the date hereof and as of the Closing Date (or, if made as of a date specified below, as of such date) with respect to the Relevant Companies, except as Disclosed.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller the statements contained in this Article 5 are true and accurate as of the date hereof and as of the Closing Date (or, if made as of a date specified below, as of such date).
5.1 Organization and Existence . It is duly organized, validly existing under the Laws of Korea and has all requisite power and authority required to perform each of its obligations under any agreement contemplated hereunder to which it is a party.
5.2 Due Authorization . It has full authority and capacity to execute and deliver this Agreement and to perform its obligations hereunder and all actions required to authorize the execution and performance of all its obligations under this Agreement and any other agreements and documents to which it is a party and the execution of which is contemplated hereunder have been duly taken. This Agreement has been duly executed and delivered by it, and this Agreement constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms.
5.3 Absence of Conflicts . The execution, delivery and performance by it of this Agreement will not: (i) violate any applicable Law or Government Approval applicable to it, or (ii) violate or conflict with, or constitute (with due notice or lapse of time or both) a default under, any agreement or instrument to which it is a party or by which it is bound, or (iii) violate any term of its Organizational Documents.
5.4 No Proceeding . There is no Action pending or threatened against it, at law or in equity, that challenges, or may have the effect of preventing, delaying, making illegal or otherwise interfering with, the consummation of the Transaction.
5.5 Government Approval . Other than those Governmental Approvals listed in Schedule 5.5 , no Governmental Approval is required to be obtained by it under the relevant Law in connection with the execution, delivery and performance of this Agreement at or prior to the Closing Date.
5.6 Third Party Consent . The execution, delivery and performance by it of this Agreement and the consummation of the Transaction do not and will not require any consent, approval or action by or notification to any Person.
5.7 Sufficient Funding . On or prior to the Closing Date, the Purchaser will have sufficient cash, available lines of credit or other sources of immediately available funds to satisfy its obligations under this Agreement at Closing, including the payment of the Purchase Price on the Closing Date.
6.1 General . During the period between the date hereof and the Closing Date, each Party will use its best efforts to take all actions and do all things necessary, proper or advisable to consummate, make effective, and comply with all of the terms of this Agreement and the Transaction applicable to such Party (including satisfaction, but not waiver, of the Closing conditions for which it is responsible or otherwise in control, as set forth in Article 7). Each Party shall cooperate with each other and use best efforts to satisfy each of the conditions precedent for which it is responsible.
6.2 Notices and Filings . Each Party will give any notices to, make any filings with, and use its best efforts to obtain, as soon as practicable any Governmental Approvals, if any, required of such Party for or in connection with the Transaction. Until the Closing, the Seller shall cause the Company to provide the Purchaser with all information and material relating to a business combination report in respect of the Transaction with the Korea Fair Trade Commission or any other filings required to be made with any other Governmental Authority without delay.
6.3 Conduct of Business Prior to Closing . During the period commencing on the date hereof and ending on the Closing Date, except with the prior written consent of the Purchaser, the Seller shall cause each Relevant Company to conduct its business in the Ordinary Course of Business except (i) in compliance with any change in applicable Law or (ii) as contemplated under this Agreement. Without limiting the generality of the foregoing, except as the Purchaser consents in writing in advance, which consent shall not be unreasonably withheld or delayed, the Seller shall cause each Relevant Company not to:
(a) | issue, sell, pledge, transfer, grant, otherwise dispose of or encumber any shares of capital stock or other equity interests of any Relevant Company, convertible bonds, bonds with warrants or any other securities convertible into or exercisable for any shares of capital stock of any Relevant Company or equity interests, any rights, warrants, options, calls or commitments to acquire or related to any shares of capital stock or other equity interests with respect to the Company, any awards under any bonus, incentive or other compensation plan or arrangement which would result in the right to receive shares or other equity interests of any Relevant Company (including the grant of stock options) or modify or amend any right of any holder of outstanding shares of capital stock of, or any options with respect to any Relevant Company; |
(b) | enter into, assign, transfer, extend, modify or terminate any Material Contracts; |
(c) | amend any of the Organizational Documents of any Relevant Company or take any action with respect to any such amendment or any recapitalization, restructuring reorganization, liquidation or dissolution of any Relevant Company; |
(d) | declare, set aside, make or pay any dividend or other distribution, payable in cash, stock or property, with respect to any capital stock or other equity or ownership interest in any Relevant Company; |
(e) | take any action that would require resolutions of the shareholders meeting of any Relevant Company, except for those resolutions that may be required to effectuate and carryout the terms and conditions of this Agreement; |
(f) | borrow from financial institutions, issue any debt securities or otherwise incur any indebtedness or guarantee any indebtedness; assume, guarantee or endorse any obligations of any other Person (“ Indebtedness ”) which would result in the increase of the outstanding amount of Indebtedness of any Relevant Company as of the date of this Agreement by more than KRW 50,000,000, in the aggregate; |
(g) | sell, transfer, lease, license or otherwise dispose of assets, properties or businesses of any Relevant Company other than inventory in any single transaction in excess of KRW 50,000,000 or series of related transactions in excess of KRW 200,000,000 in the aggregate; incur, create or assume any Encumbrance on any of the assets or properties of any Relevant Company; |
(h) | make any change in the accounting methods, policies, practices and procedures of any Relevant Company; change the normal level of inventories or supplies, or alter its practice or policy in collection of accounts receivable or payment of accounts payable, other than in the Ordinary Course of Business; |
(i) | split, combine, subdivide, reclassify or redeem, or purchase or otherwise acquire, any outstanding securities of any Relevant Company, or undertake a capital reduction of any Relevant Company; |
(j) | take any action to accelerate the payment, funding or vesting of any pension, retirement, savings, profit sharing, deferred compensation, severance, consulting, bonus, group insurance or other compensation or benefits payable thereunder, other than in the Ordinary Course of Business; |
(k) | assume or enter into or renegotiate or renew any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization of any Relevant Company; |
(l) | make any loans or capital contributions to, or investments in, any other Person; |
(m) | settle any pending or threatened claims, actions, arbitrations, disputes or other proceedings; |
(n) | make any capital expenditure in excess of KRW 100,000,000 individually or in the aggregate; |
(o) | acquire (by merger, consolidation or acquisition of shares or assets) any corporation, partnership or other business organization or division or business unit or material asset thereof or any equity interest therein; |
(p) | terminate or permit to lapse any of the Governmental Approvals or any third party consents, exemptions or waivers used in or necessary for legal existence or compliance with Laws applicable to, or the conduct of the business of each Relevant Company; |
(q) | enter into any new transaction with its Affiliate, officer or director of any Relevant Company; |
(r) | other than pursuant to employment agreements and/or the rules of employment of any Relevant Company existing as of the date of this Agreement, (A) make any material change in the terms and conditions of employment of any Employee or (B) hire, employ or lay off Employees which may incur any liabilities; grant any increase in the compensation of their Employees other than pursuant to employment agreements and/or the rules of employment of any Relevant Company existing as of the date of this Agreement; pay or provide compensation or benefit to its Employees other than pursuant to employment agreements and/or the rules of employment of any Relevant Company existing as of the date of this Agreement; |
(s) | have any Tax election made or materially changed; have any claim, notice, audit report or assessment in respect of Taxes settled or compromised (or agreement with respect thereto); execute or agree upon any Tax allocation agreement, Tax sharing agreement, advance pricing agreement, cost sharing agreement, pre-filing agreement, Tax indemnity agreement or closing agreement relating to any Tax entered into; have any annual Tax accounting period or method of Tax accounting changed or adopted; file any Tax petition, Tax complaint or administrative Tax appeal filed; have any right to claim a Tax refund surrendered or foregone; or have any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment consented to; or |
(t) | authorize, approve or enter into any agreement, arrangement or commitment with respect to any of the foregoing. |
6.4 Preservation of Business . During the period commencing on the date hereof and ending on the Closing Date, except with the prior written consent of the Purchaser, the Seller shall cause each Relevant Company to keep its business and properties substantially intact in all material respects, including its present operations, physical facilities, working conditions, and relationships with lessors, licensors, suppliers, customers, and Employees.
6.5 Notice of Development . During the period commencing on the date hereof and ending on the Closing Date, the Seller will give prompt written notice to the Purchaser of any material adverse development causing a breach of any of the representations and warranties in Articles 3 and 4. No disclosure by the Seller pursuant to this Article 6.5, however, shall be deemed to amend or supplement the Disclosure Schedule or to prevent or cure any misrepresentation, breach of warranty, or breach of covenant.
6.6 Exclusivity . The Seller shall not, and shall cause its Affiliates and its Affiliates’ Representatives not to, directly or indirectly, solicit any inquires or proposals, or enter into any discussions, negotiations, understandings, arrangements or agreements, relating to the direct or indirect disposition, whether by sale, merger or otherwise, of all or any portion of the Sale Shares or the Business or Assets of any Relevant Company to any Person or (ii) disclose, directly or indirectly, to any Person any confidential information concerning any Relevant Company or its Business or Assets except as necessary to consummate the Transaction. If the Seller or any of its advisors receives or becomes aware of an offer for such a transaction, the Seller shall provide the Purchaser with notice thereof no later than three Business Days after the receipt thereof, which notice shall include the identity of the prospective buyer or soliciting party and the terms of such offer.
6.7 Third Party Consents and Notices . Prior to the Closing, the Seller shall, and shall cause the Company to, take necessary actions to obtain written consents from or provide notice to, as applicable, each of the counterparties to the contracts listed on Schedule 6.7 .
6.8 Restrictive Covenant .
(a) | In order to ensure that the Purchaser will realize the benefits of the Transaction, the Seller hereby agrees that such Seller shall not, and shall cause its Affiliates not to (other than in case of Route Jade Co., Ltd. and Elcom in their respective Ordinary Course of Business as of the Closing Date), irrespective of any territory, and during five years after the Closing: (i) directly or indirectly, alone or as a partner, joint venture, officer, director, member, employee, consultant, agent, independent contractor or shareholder of, or landlord or lender to, any company or business, engage in any business that is the same, similar or competes with the relevant Business, and any other activity related to such Business (the “ Competing Activities ”), whether or not for compensation; (ii) induce or attempt to induce any suppliers of any Relevant Company to cease to supply or to restrict or vary supply terms to such company, (iii) solicit or induce any current customer of any Relevant Company to cease to procure products and services from, to restrict or vary terms of products and services procured from such Relevant Company, and/or (iv) solicit, entice or induce any employee of any Relevant Company to terminate his/her employment with such Relevant Company. |
(b) | The Parties agree and acknowledge that the breach of Article 6.8 may cause irreparable damage to any Relevant Company and/or the Purchaser and upon breach of any provision of Article 6.8, the Company shall be entitled to injunctive relief, specific performance, or other equitable relief without the requirement to post a bond or other security; provided, however, that the foregoing remedies shall in no way limit any other remedies which such Relevant Company and the Purchaser may have (including the right to monetary damages). |
6.9 Resignation . On or prior to the Closing Date, the Seller shall procure that each of the Resigning Officers and Directors voluntarily resign from the Company as an officer or director (such resignation to be effective on the Closing Date), provide a waiver and release of all claims against the Company, and execute and deliver a resignation, waiver and release letter substantially in the form of Exhibit A .
6.10 Shareholders’ Meeting . The Seller shall procure the Company to convene a shareholders’ meeting as soon as possible for the appointment of the persons designated by the Purchaser as directors and the statutory auditor of the Company as of the Closing Date and the approval of the amendment of the articles of incorporation of the Company in the form attached as Exhibit B .
6.11 Release . The Purchaser shall use its reasonable efforts to ensure any guarantees provided by the Seller in respect of any Indebtedness incurred by the Company is released as promptly as possible after the Closing.
6.12 Company Subsidiary Dissolution . Each Party shall use its best efforts to cause the Company to initiate the dissolution and liquidation of the Company Subsidiary as expeditiously as possible.
ARTICLE 7
CONDITIONS PRECEDENT
7.1 Conditions Precedent to the Obligations of the Parties . The obligations of each of the Parties to consummate the Transaction shall be subject to the satisfaction or waiver of all of the following conditions; provided, however, that the foregoing shall be applicable only to a Party to whom the failure of any of the following conditions is not attributable:
(a) | The consummation of the Transaction shall not have been restrained, enjoined or otherwise prohibited or made illegal by any applicable Law; |
(b) | No order, injunction, judgment or decree issued by any Governmental Authority or other legal restraint or prohibition preventing the consummation of Transaction shall be in effect; and |
(c) | No proceeding initiated by any Governmental Authority shall be pending or threatened that seek to restrain, enjoin or otherwise prevent the consummation of the Transaction. |
7.2 Conditions Precedent to the Obligations of the Seller . The obligations of the Seller to consummate the Transaction shall be subject to the satisfaction or waiver by the Seller of all of the following conditions:
(a) | The representations and warranties of the Purchaser set out in Article 5 shall be true and accurate as of the Closing Date; |
(b) | The Purchaser shall have in all material respects (except those agreements, covenants and conditions qualified by “materiality,” “Material Adverse Change/Effect” or words of similar meaning, which must be true and correct in all respects) performed and complied with all agreements, covenants and conditions required by this Agreement to be performed or complied with by the Purchaser at or prior to the Closing; and |
7.3 Conditions Precedent to the Obligation of the Purchaser . The obligation of the Purchaser to consummate the Transaction shall be subject to the satisfaction or waiver by the Purchaser of all of the following conditions:
(a) | The Seller shall have in all material respects (except those agreements, covenants and conditions qualified by “materiality,” “Material Adverse Change/Effect” or words of similar meaning, which must be true and correct in all such respects) performed and complied with all agreements, obligations, covenants and conditions required by this Agreement to be performed or complied with by the Seller at or prior to the Closing; |
(b) | The representations and warranties of the Seller set out in Article 3 shall be true and accurate and the representations and warranties set out in Article 4 shall be true and accurate in all material respects (except those representations and warranties qualified by “materiality,” “Material Adverse Change/Effect” or words of similar meaning, which must be true and correct in all such respects) as of the Closing Date; |
(c) | Since the date hereof, there shall not have occurred any Material Adverse Change; |
(d) | Chairman Hong shall have delivered a resignation, waiver and release letter signed by each of the Resigning Officers and Directors in the form attached hereto as Exhibit A together with any other documents necessary to complete registration of their resignation; |
(e) | The Purchaser, the Seller and the Escrow Agent shall have entered into the Escrow Agreement in accordance with Article 2.3; |
(f) | The Seller shall have delivered to the Purchaser a document evidencing convening of a shareholders’ meeting of the Company for the appointment of the persons designated by the Purchaser as directors and the statutory auditor of the Company as of the Closing Date and approval of the amendment to the articles of incorporation of the Company in the form attached hereto as Exhibit B. |
7.4
Waiver
.
(a) | The Seller may at any time waive in whole or in part and conditionally or unconditionally the conditions set out in Article 7.2 by notice in writing to the Purchaser. |
(b) | The Purchaser may at any time waive in whole or in part and conditionally or unconditionally the conditions set out in Article 7.3 by notice in writing to the Seller. |
8.1 Seller’s Indemnification .
(a) | General Indemnity. Subject to Article 8 and the other terms and conditions of this Agreement, the Seller shall indemnify and hold harmless the Purchaser and its respective Affiliates (the “ Purchaser Indemnified Parties ”) from and against any and all losses, damages, liabilities, costs (including legal costs and experts’ and consultants’ fees), charges, expenses, actions, proceedings, loss of opportunities, claims, demands, fines, interest and penalties (collectively, the “ Losses ”) that are sustained or incurred by any of the Purchaser Indemnified Parties by reason of, resulting from or arising out of any breach or inaccuracy in any representation or warranty made by such Seller contained in this Agreement, or any breach, violation or non-fulfillment of any covenant, obligation or agreement contained in this Agreement. Regardless of whether the Purchaser or any of its Affiliates or any of their respective Representatives had or should have had knowledge or notice of any facts or circumstances which would result in the breach of, or inaccuracy in, any representation or warranty or the failure of any condition to be satisfied or the breach of any covenant, agreement or obligation hereunder, for purposes of this Agreement, the Purchaser shall not be deemed to have waived such breach or inaccuracy or condition. Actual or constructive knowledge, due diligence investigations, access to information, sophistication, experience, notices and any other actual or deemed sources of information outside the express provisions of this Agreement shall in no way limit the scope of any representation, warranty or condition or heighten any materiality or Material Adverse Effect threshold herein or otherwise expand any qualification or other provision herein beyond what is expressly provided herein. |
(b) | Special Indemnities . Without limiting the generality of Article 8.1(a) and notwithstanding the following matters set forth in this Article 8.1(b) being Disclosed, Chairman Hong shall indemnify and hold harmless the Purchaser Indemnified Parties from and against any and all Losses arising, directly or indirectly, from or in connection with the matters set forth in this Article 8.1(b). |
(i) | Statutory Working Hours and Weekly Holiday Pay . Chairman Hong shall indemnify and hold harmless the Purchaser Indemnified Parties from and against any and all Losses arising, directly or indirectly, from or in connection with (i) unpaid or underpaid work allowances under applicable Law payable to an Employee and/or a former employee of the Company; (ii) other payments due by Company to an Employee and/or former employee of the Company under applicable Law and/or by contract; and (iii) violation of any applicable Law relating to the employment of its current and former Employees. |
(ii) | Illegal Dispatch . Chairman Hong shall indemnify and hold harmless the Purchaser Indemnified Parties from and against any and all Losses arising, directly or indirectly, from or in connection with any illegal dispatch of subcontract workers currently and/or formerly engaged by or related to the Company. |
(iii) | Use of Head Office . Chairman Hong shall indemnify and hold harmless the Purchaser Indemnified Parties from and against any and all Losses arising, directly or indirectly, from or in connection with the Company’s failure to obtain, or violation of, the relevant Governmental Approval for the use of its head office building located at 30-78 1220 Beongil Gyeongsu-Daero, Jangan-gu, Suwon-si, Gyeonggi-do, Korea. |
(iv) | Lease and Use of Warehouse in Agro-Industrial Complex . Chairman Hong shall indemnify and hold harmless the Purchaser Indemnified Parties from and against any and all Losses arising, directly or indirectly, from or in connection with the Company’s occupancy of its industrial sites without executing an occupancy contract in compliance with the Industrial Cluster Act. |
(v) | Affiliated Transactions . Chairman Hong shall indemnify and hold harmless the Purchaser Indemnified Parties from and against any and all Losses arising, directly or indirectly, from or in connection with (A) the Company’s failure to comply with the relevant Laws with respect to the entry into any and all transactions with any of its Affiliates or (B) the agreements entered into with such Affiliates not complying with the relevant Laws. |
(vi) | Firebreak at S&C Electric’s Plant . Chairman Hong shall indemnify and hold harmless the Purchaser Indemnified Parties from and against any and all Losses arising, directly or indirectly, from or in connection with any Action relating to a firebreak at S&C Electric’s plant located at 3251 W.Franklin Drive, Franklin WI 53132, U.S.A on August 10, 2016 to which the Company is, or becomes, a party. |
(vii) | Tax . Chairman Hong shall indemnify and hold harmless the Purchaser Indemnified Parties from and against any and all Losses arising, directly or indirectly, from or in connection with any violation of the representation and warranty under Sections 4.13(g), (h) or (i) (Taxes) of Schedule 4 . |
(c) | Limitation on the Seller’s Liability: |
(i) | Notwithstanding any provision to the contrary in this Agreement, the aggregate liability of the Seller under this Agreement arising as a result of a breach of the representations and warranties contained in Articles 3.1 (Citizenship/Residence), 3.3 (Authorization), 3.6 (The Sale Shares) and Section 4.1 (Organization and Existence) of Schedule 4 shall be unlimited. |
(ii) | Subject to Paragraph (i) above, the Seller shall not have any liability for any Loss relating to any individual claim or series of related claims based on a similar set of operative facts unless Loss relating to such claim or series of related claims suffered by the Purchaser is greater than KRW 100,000,000 and the Seller shall not have any liability for the Losses unless and until the aggregate of all Losses for which the Seller shall be liable exceeds on a cumulative basis KRW 1,000,000,000 at which point the Seller shall be responsible for the full amount of such Losses. |
(iii) | Subject to Paragraph (i) above, in no event shall the aggregate liability of Chairman Hong under this Agreement arising as a result of a breach of a representation and warranty, whether pursuant to this Article 8.1 or otherwise exceed (i) the Escrow Amount for any and all Losses arising, directly or indirectly, from or in connection with Article 8.1(a), and (ii) KRW 16,600,000,000 for any and all Losses arising, directly or indirectly, from or in connection with the matters set forth in this Article 8.1(b) subject to Article 8.1(c)(iv). |
(iv) | For the avoidance of doubt, limitations on the Seller’s liability under Article 8.1(c)(ii) shall not apply to any liability arising pursuant to Article 8.1(b), provided that the Seller shall not have any liability for any Loss under Article 8.1(b)(vi) unless and until the aggregate of all Losses for which the Seller shall be liable exceeds on a cumulative basis USD 1 million at which point the Seller shall be responsible for the full amount of such Losses up to USD 5 million. |
(v) | The amount of any Loss for which indemnification is provided under this Article 8 shall be determined net of any amounts actually recovered by the Purchaser Indemnified Party under or pursuant to any insurance policy to which or under which such Purchaser Indemnified Party is a party or has rights (it being agreed that if any insurance, indemnification, reimbursement or similar proceeds are recovered by the Purchaser Indemnified Party for any Loss after the Seller has made an indemnification payment in connection with such Loss, an amount equal to the lesser of such indemnification payment made by the Seller and such proceeds received by the Purchaser Indemnified Party shall as promptly as practicable be remitted to the Seller). |
(vi) | Notwithstanding anything to the contrary contained herein, the Parties shall not, in any event, be liable (whether based on breach of contract, tort or otherwise) for (i) any consequential, punitive, incidental or indirect damages or (ii) Losses that arise out of changes in any applicable Law or its interpretation after the date hereof. |
8.2 Purchaser’s Indemnification . Subject to the other terms and conditions of this Agreement, the Purchaser shall indemnify and hold harmless the Seller (the “ Seller Indemnified Party ”) from and against any Losses that are sustained or incurred by any of the Seller by reason of, resulting from or arising out of any material breach or inaccuracy in any representation or warranty made by the Purchaser contained in this Agreement, or any material breach, violation or non-fulfillment of any covenant, obligation or agreement contained in this Agreement.
8.3 Survival Period .
(a) | Except as provided for in Article 8.3(c), all of the representations and warranties contained herein shall survive the Closing hereunder and continue in full force and effect for a period of two years thereafter; provided, however, that (i) the representations and warranties contained in Sections 4.13 (Taxes) of Schedule 4 shall survive until the expiration of the applicable statute of limitations, and (ii) the representations and warranties contained in Section 4.17 (Environmental Matters) of Schedule 4 , shall survive for a period of three years thereafter; it being understood that, if notice of any claim for indemnification has been given (within the meaning of Article 10.9) within the applicable survival period, the representations and warranties or the indemnification obligations that are the subject of such indemnification claim shall survive with respect to such claim until such time as such claim becomes the subject of a Final Determination. |
(b) | The special indemnification obligations of the Seller set out in Article 8.1(b)(i) (Statutory Working Hours and Weekly Holiday Pay), 8.1(b)(ii) (Illegal Dispatch), 8.1(b)(v) (Affiliated Transactions) and 8.1(b)(vi) (Firebreak at S&C Electric’s Plant) shall survive the Closing hereunder and continue in full force and effect for a period of two years thereafter, and the special indemnification obligations of the Seller set out in Article 8.1(b)(iii) (Use of Head Office) special indemnification obligations of the Seller set out in Article 8.1(b)(iv) (Lease and Use of Warehouse in Agro-Industrial Complex) shall survive the Closing hereunder and continue in full force and effect for a period of three years thereafter, and special indemnification obligations of the Seller set out in Article 8.1(b)(vii) (Tax) shall survive until the expiration of the applicable statute of limitations. |
(c) | Representations and warranties set out in Articles 3.1 (Citizenship and Residence), 3.3 (Authorization), 3.6 (The Sale Shares) and Section 4.1 (Organization and Existence) of Schedule 4 ) shall survive indefinitely. |
8.4 | Procedure for Indemnification |
(a) | Notices of claims under this Agreement by any Indemnified Party shall be given to the Purchaser or the Seller, as the case may be (the “ Indemnifying Party ”) within the relevant period specified in Article 8.3, but in any event no later than 60 calendar days after such Indemnified Party’s first becoming aware of such claim. In case of claims for inaccuracy in or breach of representations and warranties, such notice shall be made within the relevant survival period pursuant to Article 8.3. Such notice of claim shall specify in reasonable detail the factual basis of the claim and a non-binding estimate of the amount of Losses which are, or are to be, the subject of the claim (including any Losses which are contingent on the occurrence of any future event). If any Party fails to give notice required pursuant to this Article 8.4(a) within the relevant period specified in Article 8.3, such Party shall not be entitled to make the relevant claim under this Agreement. Upon receipt of such notice, in the event that the Indemnifying Party does not agree with the contents of such notice of claim, it must notify the Indemnified Party of such disagreement within 14 Business Days of receiving the notice of claim, and the Parties agree to resolve such dispute through Article 10.3. |
(b) | If any claim is instituted by a third party against any Indemnified Party, the Indemnifying Party shall have the right, at its expense, to participate in or assume control of the negotiation, settlement or defense of such claim by advising the Indemnified Party of its election within 15 days of the date it receives notice of the claim. Even if the Indemnifying Party elects to participate in or assume control of such negotiation, settlement or defense, the Indemnified Party shall have the right to participate in the negotiation, settlement or defense of such third party claim and to retain counsel to act on its behalf; provided, however, that the fees and disbursements of such counsel shall be paid by the Indemnified Party. The Indemnified Party shall cooperate at the Indemnifying Party’s expense with the Indemnifying Party so as to permit the Indemnifying Party to conduct such negotiation, settlement and defense and for this purpose shall preserve all relevant documents in relation to the third party claim, allow the Indemnifying Party access on reasonable notice to inspect and take copies of all such documents and require its personnel to provide such statements as the Indemnifying Party may reasonably require and to attend and give evidence at any trial or hearing in respect of the third party claim. If, having elected to assume control of the negotiation, settlement or defense of the third party claim, the Indemnifying Party thereafter fails to conduct such negotiation, settlement or defense with reasonable diligence, then the Indemnified Party shall be entitled to assume such control at its own cost and the Indemnifying Party shall be bound by the results obtained by the Indemnified Party with respect to such third part claim, provided, however, that in no event shall the Indemnified Party settle the proceeding without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld, delayed or conditioned. |
8.5 Adjustment of Purchase Price . Any payment to the Indemnified Parties under this Article 8 will be, to the extent permitted by applicable Laws, an adjustment to the Purchase Price.
8.6 Governmental Approvals . In the event that any Governmental Approvals are necessary in connection with any payment to be made by the Seller pursuant to the Seller’s indemnification obligations set forth under this Article 8, the Seller hereby agrees to execute and deliver all such documents, and do all such things, as may be required, for purposes of obtaining any such Governmental Approval.
9.1 Termination . This Agreement may be terminated by written notice to the other Party at any time prior to the Closing Date:
(a) | by the written agreement of the Purchaser and the Seller; |
(b) | by either Party, if the other Party shall have breached, in any material respect, any of its representations, warranties, covenants or other obligations under this Agreement and such breach shall be incapable of cure or has not been cured within 15 Business Days following the giving of written notice of such breach to the other Party; |
(c) | by the Purchaser, if any of the conditions in Article 7.1 or 7.3 shall not have been, or is or becomes incapable of being satisfied, unless such failure shall be due to the failure of the Purchaser to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing, and the Purchaser has not waived such condition, and the non-satisfaction is not due to a failure by the Purchaser to fulfill its obligations under this Agreement; |
(d) | by the Seller, if any of the conditions in Article 7.1 or 7.2 shall not have been, or is or becomes incapable of being satisfied, unless such failure shall be due to the failure of the Seller to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing, and the Seller have not waived such condition, and the non-satisfaction is not due to a failure by the Seller to fulfill its obligations under this Agreement; |
(e) | by either Party, if a Law has been promulgated or enacted that makes illegal the performance of this Agreement as at the Closing, or an Order that enjoins or restrains the performance of this Agreement as at the Closing has become final and non-appealable; |
(f) | by the Purchaser, if a Material Adverse Effect (or Change) has occurred after the date hereof and before the Closing; |
(g) | by the Purchaser, if (i) an Order has been made, petition filed or resolution passed for the winding up , dissolution or liquidation of the Company or for the appointment of a liquidator, custodian or trustee for all or substantially all of the property or assets of the Company or for an administration order in respect of the Company, (ii) the Company has commenced any other proceeding for itself under any bankruptcy, reorganization, arrangement, adjustment of debt, release of debtors, dissolution, insolvency, liquidation or similar law of any jurisdiction, and there has not been commenced against the Company any such proceeding, or (iii) any public auction, foreclosure, attachment, execution or other process has been levied on any assets of the Company; |
(h) | by the Seller, if (i) an Order has been made, petition filed or resolution passed for the winding up , dissolution or liquidation of the Purchaser or for the appointment of a liquidator, custodian or trustee for all or substantially all of the property or assets of the Purchaser or for an administration order in respect of the Purchaser, (ii) the Purchaser has commenced any other proceeding for itself under any bankruptcy, reorganization, arrangement, adjustment of debt, release of debtors, dissolution, insolvency, liquidation or similar law, as applicable, of any jurisdiction, and there has not been commenced against the Purchaser any such proceeding, or (iii) any public auction, foreclosure, attachment, execution or other process has been levied on any assets of the Purchaser; or |
9.2 Effect of Termination . If this Agreement is terminated pursuant to Article 9.1, this Agreement shall become void and of no effect without liability of any Party (or its Affiliates or any of its Representatives) to the other Party; provided, however, that nothing herein shall relieve any Party from liability for any breach hereof prior to such termination; provided, further, that the provisions of Articles 1, 8, 9 and 10 shall survive any termination of this Agreement.
10.1 Taxes and Expenses . Except as otherwise expressly provided in this Agreement, each Party shall be responsible for and bear its own taxes, fees, costs and expenses imposed, levied, assessed or incurred on or by the Party for or in connection with the negotiation, preparation, execution and performance of this Agreement and the Transaction, including, without limitation, fees and disbursements of legal counsel.
10.2 Confidentiality and Public Announcements . Each Party shall maintain in confidence, and shall cause its Representatives to maintain in confidence, any written, oral, or other information obtained in confidence from the other Party or the Company in connection with this Agreement or the Transaction, unless (i) such information is already known to such Party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such Party, (ii) the use of such information is necessary or appropriate in making any filing or obtaining any Governmental Approvals required for the consummation of the Transaction, or (iii) the furnishing or use of such information is required by applicable Laws. The foregoing confidentiality obligations shall not apply to the Purchaser with respect to confidential information concerning the Company from and after the Closing. Further, the Parties shall not make or issue any press release or public disclosure without the prior consent of the other Parties in relation to the execution, content, and termination of this Agreement; provided, however, that the Purchaser, alone or jointly with its Affiliate(s) and/or the Company, may, without the prior consent of the Seller, make or issue a press release(s) and/or a public announcement or disclosure(s) as may be required under applicable Laws or other relevant requirements of a securities exchange after it has notified the Seller of such fact.
10.3 Governing Law; Dispute Resolution .
(a) | This Agreement and all disputes arising out of or in connection with this Agreement shall be governed by, interpreted under, and construed and enforceable in accordance with, the Laws of Korea. |
(b) | Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the Rules of the International Chamber of Commerce, which Rules are deemed to be incorporated by reference into this clause. The number of arbitrators shall be three. The seat, or legal place, of arbitration shall be Hong Kong. The language to be used in the arbitral proceedings shall be English. Any arbitration award shall be final and binding upon the Parties. |
10.4 Assignment . This Agreement and each and every covenant, term and condition hereof shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns. Neither Party may assign any of its rights or delegate any of its obligations under this Agreement without obtaining the prior written consent of the other Party; provided, however, that the Purchaser may assign all of its rights or delegate all of its obligation under this Agreement to its Affiliate by providing a written notice in advance to the Seller.
10.5 Entire Agreement . This Agreement and the Escrow Agreement constitute the entire agreement between the Purchaser on one hand and the Seller on the other hand in respect of the subject matter hereof and supersedes any prior expressions of intent or understandings with respect thereto; provided, however, that nothing in this Agreement, the Escrow Agreement or related agreements shall be deemed to terminate or supersede the provisions of any confidentiality and nondisclosure agreements executed by the Parties hereto prior to the date hereof, which agreements shall continue in full force and effect until terminated in accordance with their respective terms.
10.6 Amendments and Waivers; Remedies Cumulative . This Agreement may be amended or modified only by an instrument in writing duly executed by the Parties. Any amendment or waiver effected in accordance with this Article 10.6 shall be binding upon the Parties hereto their respective assigns, successors, heirs, executors and administrators. The failure or delay of either Party to require performance by the other Party of any provision of this Agreement shall not affect its right to require performance of such provision nor shall any single or partial exercise of the same preclude any further exercise thereof or the exercise of any other right, power or remedy.
10.7 Set off . The Purchaser shall utilize or exhaust in full the Escrow Amount before proceeding against the Seller with respect to any Seller Indemnifiable Claims.
10.8 Severability . If any provision of this Agreement is found to be invalid or unenforceable, then such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the Transaction on substantially the same terms as originally set forth herein, and if no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties. In such event, the Parties shall use best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly affects the Parties’ intent in entering into this Agreement.
10.9 Notices . Each notice, demand or other communication to be given or made under this Agreement shall be in writing and delivered by hand or internationally recognized overnight air courier or transmitted by facsimile to the relevant Party at its address or fax number set out in Schedule 1 (or such other address or fax number as the addressee has by seven days’ prior written notice specified to the other Party). Any notice, demand or other communication so addressed to the relevant Party shall be deemed to have been duly given (a) if delivered by hand or internationally recognized overnight air courier, when actually delivered to the relevant address, and (b) if transmitted by fax, when dispatched with a simultaneous confirmation of transmission, provided that if such day is not a working day in the place to which it is sent, such notice, demand or other communication shall be deemed delivered on the next following working day at such place.
10.10 No Third Party Beneficiary . This Agreement is solely for the benefit of the Parties and permitted assigns, and this Agreement shall not otherwise be deemed to confer upon or give to any other third party, including any creditor, any remedy, claim, liability, reimbursement, cause of action or other right.
10.11 Language; Counterparts . This Agreement shall be executed in the English language. This Agreement may be executed in counterparts, each of which shall be deemed to constitute an original but all of which shall constitute one and the same instrument. Any facsimile copy of another Party’s executed counterpart of this Agreement (or its signature page thereof) shall be deemed to be an executed original thereof.
10.12 Effectiveness . This Agreement shall take effect and become legally binding upon the execution of all of this Agreement, the Service Agreement, and all of the share purchase agreements with each of the Corporate Sellers.
[Signature page follows]
Signature Page to Share Purchase Agreement
IN WITNESS WHEREOF , each of the Parties has caused this Agreement to be executed as of the date first above written.
SELLER :
JI JUN HONG
By: ________________________
Date of Birth: ________________
Signature Page to Share Purchase Agreement
PURCHASER:
SolarEdge Technologies Korea Co., Ltd.
By: ________________________
Name:
Title:
(1)
|
_______________
(“
Korea
”), having its principal office at _______________ (the “
Seller
”); and
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|
|
(2)
|
SolarEdge Technologies Korea Co., Ltd., a company incorporated under the laws of Korea, having its principal office at 3-307, 308, Office A, 17 Worldcupbuk-ro 54gil, Mapo-gu, Seoul, Korea (the “
Purchaser
”).
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Article 1. |
Sale and Purchase of the Shares
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1.1 |
Sale and Purchase of Shares
. Subject to the terms and conditions of this Agreement, the Seller shall sell to the Purchaser and the Purchaser shall purchase from the Seller the Sale Shares, free and clear of any and all liens, charges, security interests, pledges, encumbrances, claims and demands whatsoever.
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1.2 |
Purchase Price
. The purchase price for the Sale Shares sold by the Seller and purchased by the Purchaser (the “
Purchase Price
”) shall be KRW __________ (KRW 6,444 per share).
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Article 2. |
Closing
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2.1 |
Closing Date
. Subject to the terms of this Agreement, the closing (the “
Closing
”) of the share transfer transaction contemplated hereunder shall take place at the office of Shin & Kim, commencing at 10:00 a.m. Seoul time on the date on which the closing of the sale and purchase of 4,887,596 shares of the Company between the Purchaser and Ji Jun Hong occurs or such other date mutually agreed upon between the parties (such date is hereinafter referred to as the “
Closing Date
”), provided that the Closing shall only take place upon the contemporaneous closing of the sale and purchase of shares from other shareholders in the Company representing 11,309,718 shares of the Company.
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2.2 |
Closing Transactions
. At the Closing, (i) the Seller shall deliver the share certificates representing the Sale Shares, (ii) the Purchaser shall pay the Purchase Price to the Seller by wire transfer of immediately available funds to the bank account of the Seller set forth below:
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2.3 |
Further Assurance.
The Seller shall undertake to do and effect all actions required for the purposes of completing the transactions contemplated by the SPA and in particular the vesting of the rights in connection with the Sale Shares to the Purchaser.
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3.1 |
Representations and Warranties of Seller
. The Seller represents and warrants to the Purchaser, as of the Closing Date, as follows:
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3.2 |
Representations and Warranties of Purchaser
. The Purchaser represents and warrants to the Seller, as of the Closing Date, as follows:
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4.1 |
Governing Law
. This Agreement and all disputes arising out of or in connection with this Agreement shall be governed by, interpreted under, and construed and enforceable in accordance with, the Laws of Korea.
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4.2 |
Dispute Resolution
. Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the Rules of the International Chamber of Commerce, which Rules are deemed to be incorporated by reference into this clause. The number of arbitrators shall be three. The seat, or legal place, of arbitration shall be Hong Kong. The language to be used in the arbitral proceedings shall be English. Any arbitration award shall be final and binding upon the Parties.
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5.1 |
Each Party (the “
Indemnifying Party
”) shall indemnify and hold harmless the other Party (the “
Indemnified Party
”) from and against any and all losses, damages, liabilities, costs (including legal costs and experts’ and consultants’ fees), charges, expenses, actions, proceedings, claims, demands, fines, interest and penalties that are sustained or incurred by the Indemnified Party by reason of, resulting from or arising out of any breach or inaccuracy in any representation or warranty or breach of any covenant of the Indemnifying Party contained in this Agreement.
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6.1 |
Effectiveness
. This Agreement shall become effective as of the date the Purchaser executes the sale purchase agreements with the Seller and other shareholders in the Company representing the sale and purchase of 11,309,718 shares of the Company, including the sale and purchase of 4,887,596 shares of the Company from Ji Jun Hong.
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6.2 |
Notices
. All notices, consents, waivers, and other communications under this Agreement shall be (i) in writing, (ii) delivered by hand-delivery, registered first class mail (return receipt requested), facsimile, or air courier guaranteeing overnight delivery, (iii) deemed to have been given on the date on which it is received.
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6.3 |
Assignment
. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, and no other Person shall have any right, benefit or obligation under this Agreement.
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6.4 |
Amendments
. This Agreement may be amended only by written agreement among the relevant parties.
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6.5 |
Severability
. If one of more provisions of this Agreement are held to be invalid or unenforceable to any extent under applicable law, such provision shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, so as to effectuate the parties’ intent to the maximum extent, and the remainder of this Agreement shall be interpreted as if such provision were excluded and shall be valid and enforceable in accordance with its terms to the maximum extent permitted by applicable law.
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6.6 |
Costs, Expenses and Taxes
. Each party shall bear its own costs, expenses and taxes incurred in connection with this Agreement, including, without limitation, the fees and expenses of their respective accountants and legal counsel, capital gains tax (in case of the Seller) and securities transaction tax (in case of the Seller), regardless of whether the transactions contemplated hereby shall be consummated.
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6.7 |
Counterparts
. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same document.
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Name
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Jurisdiction of organization
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SolarEdge Technologies Ltd.
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Israel
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SolarEdge Technologies GmbH
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Germany
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SolarEdge Technologies China
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China
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SolarEdge Technologies (Australia) PTY LTD
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Australia
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SolarEdge Technologies (Canada) Ltd.
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Canada
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SolarEdge Technologies (Holland) B.V.
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The Netherlands
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SolarEdge Technologies (Japan) Co., Ltd.
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Japan
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SolarEdge Technologies (France) SARL.
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France
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SolarEdge Technologies (UK) Ltd.
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United Kingdom
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SolarEdge Technologies Italy S.R.L.
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Italy
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SolarEdge Technologies (Bulgaria) Ltd.
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Bulgaria
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Guangzhou SolarEdge Machinery Technical Consulting Co. Ltd
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China
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SOLAREDGE TEKNOLOJİ A.Ş.
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Turkey
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SolarEdge Technologies (Belgium) SPRL
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Belgium
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SolarEdge Technologies SRL.
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Romania
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SOLAREDGE TECHNOLOGIES (INDIA) PRIVATE LIMITED
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India
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SolarEdge Technologies (Sweden) AB
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Sweden
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SolarEdge Technologies Taiwan Co., Ltd.
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Taiwan
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SolarEdge Technologies Korea Co., Ltd.
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South Korea
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Kokam Co., Ltd.
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Korea
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Gamatronic (UK) Limited.
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United Kingdom
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/s/ KOST FORER GABBAY & KASIERER
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Tel-Aviv, Israel
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KOST FORER GABBAY & KASIERER
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February 28, 2019
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A Member of Ernst & Young Global
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