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x
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QUARTERLY 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
(State or other jurisdiction of
incorporation or organization)
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20-4645388
(I.R.S. Employer
Identification No.)
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1420 N. McDowell Blvd.
Petaluma, California
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94954
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements (Unaudited)
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March 31,
2015 |
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December 31,
2014 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
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27,127
|
|
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$
|
42,032
|
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Accounts receivable, net of allowances of $533 and $569 at March 31, 2015 and December 31, 2014, respectively
|
45,870
|
|
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45,119
|
|
||
Inventory
|
34,746
|
|
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21,590
|
|
||
Prepaid expenses and other assets
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7,087
|
|
|
6,155
|
|
||
Total current assets
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114,830
|
|
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114,896
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|
||
Property and equipment, net
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31,197
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|
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30,824
|
|
||
Goodwill
|
3,745
|
|
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3,745
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|
||
Intangibles, net
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1,704
|
|
|
1,811
|
|
||
Other assets
|
2,014
|
|
|
916
|
|
||
Total assets
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$
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153,490
|
|
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$
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152,192
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
30,954
|
|
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$
|
22,316
|
|
Accrued liabilities
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20,230
|
|
|
26,036
|
|
||
Deferred revenues
|
3,558
|
|
|
2,747
|
|
||
Warranty obligations, current portion (includes $1,534 and $1,125 measured at fair value at March 31, 2015 and December 31, 2014, respectively)
|
7,550
|
|
|
7,607
|
|
||
Total current liabilities
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62,292
|
|
|
58,706
|
|
||
Long-term liabilities:
|
|
|
|
||||
Deferred revenues, noncurrent
|
18,217
|
|
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16,612
|
|
||
Warranty obligations, noncurrent (includes $3,249 and $2,437 measured at fair value at
March 31, 2015 and December 31, 2014, respectively)
|
26,613
|
|
|
26,333
|
|
||
Other liabilities
|
2,387
|
|
|
3,589
|
|
||
Total liabilities
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109,509
|
|
|
105,240
|
|
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Commitments and contingencies
|
|
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|
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.00001 par value, 10,000 shares authorized; none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.00001 par value, 100,000 shares authorized; 44,117 and 43,756 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
211,687
|
|
|
208,022
|
|
||
Accumulated deficit
|
(167,311
|
)
|
|
(160,991
|
)
|
||
Accumulated other comprehensive loss
|
(395
|
)
|
|
(79
|
)
|
||
Total stockholders’ equity
|
43,981
|
|
|
46,952
|
|
||
Total liabilities and stockholders’ equity
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$
|
153,490
|
|
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$
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152,192
|
|
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Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
Net revenues
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$
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86,653
|
|
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$
|
57,580
|
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Cost of revenues
|
58,629
|
|
|
38,925
|
|
||
Gross profit
|
28,024
|
|
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18,655
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development
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13,430
|
|
|
9,086
|
|
||
Sales and marketing
|
11,937
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|
|
8,828
|
|
||
General and administrative
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8,205
|
|
|
6,526
|
|
||
Total operating expenses
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33,572
|
|
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24,440
|
|
||
Loss from operations
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(5,548
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)
|
|
(5,785
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)
|
||
Other income (expense), net:
|
|
|
|
||||
Interest expense
|
(78
|
)
|
|
(449
|
)
|
||
Other (expense) income
|
(527
|
)
|
|
107
|
|
||
Total other expense, net
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(605
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)
|
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(342
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)
|
||
Loss before income taxes
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(6,153
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)
|
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(6,127
|
)
|
||
Provision for income taxes
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(167
|
)
|
|
(109
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)
|
||
Net loss
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$
|
(6,320
|
)
|
|
$
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(6,236
|
)
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Net loss per share, basic and diluted
|
$
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(0.14
|
)
|
|
$
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(0.15
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)
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Shares used in computing net loss per share, basic and diluted
|
43,950
|
|
|
42,205
|
|
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Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
Net loss
|
$
|
(6,320
|
)
|
|
$
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(6,236
|
)
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Other comprehensive (loss) income:
|
|
|
|
||||
Foreign currency translation adjustments
|
(316
|
)
|
|
1
|
|
||
Comprehensive loss
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$
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(6,636
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)
|
|
$
|
(6,235
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)
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Three Months Ended
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
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(6,320
|
)
|
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$
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(6,236
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)
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Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
2,532
|
|
|
1,910
|
|
||
Provision for doubtful accounts
|
—
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|
|
26
|
|
||
Net loss on disposal of assets
|
191
|
|
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6
|
|
||
Non-cash interest expense
|
39
|
|
|
102
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Stock-based compensation
|
2,988
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|
|
2,013
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|
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Revaluation of contingent consideration liability
|
104
|
|
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—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(751
|
)
|
|
3,608
|
|
||
Inventory
|
(13,156
|
)
|
|
2,467
|
|
||
Prepaid expenses and other assets
|
(2,069
|
)
|
|
(977
|
)
|
||
Accounts payable, accrued and other liabilities
|
2,305
|
|
|
1,159
|
|
||
Warranty obligations
|
223
|
|
|
296
|
|
||
Deferred revenues
|
2,416
|
|
|
(93
|
)
|
||
Net cash (used in) provided by operating activities
|
(11,498
|
)
|
|
4,281
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(3,611
|
)
|
|
(2,172
|
)
|
||
Net cash used in investing activities
|
(3,611
|
)
|
|
(2,172
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayments of term loans
|
—
|
|
|
(866
|
)
|
||
Proceeds from issuance of common stock under employee stock plans
|
677
|
|
|
454
|
|
||
Net cash provided by (used in) financing activities
|
677
|
|
|
(412
|
)
|
||
Effect of exchange rate changes on cash
|
(473
|
)
|
|
48
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(14,905
|
)
|
|
1,745
|
|
||
Cash and cash equivalents—Beginning of period
|
42,032
|
|
|
38,190
|
|
||
Cash and cash equivalents—End of period
|
$
|
27,127
|
|
|
$
|
39,935
|
|
Supplemental disclosures
of non-cash investing and financing activities:
|
|
|
|
||||
Purchases of property and equipment included in accounts payable
|
$
|
1,269
|
|
|
$
|
497
|
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
Raw materials
|
$
|
4,179
|
|
|
$
|
3,429
|
|
Finished goods
|
30,567
|
|
|
18,161
|
|
||
Total inventory
|
$
|
34,746
|
|
|
$
|
21,590
|
|
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
Warranty obligations, beginning of period
|
$
|
33,940
|
|
|
$
|
30,432
|
|
Accruals for warranties issued during period
|
1,105
|
|
|
613
|
|
||
Changes in estimates
|
58
|
|
|
1,400
|
|
||
Settlements
|
(1,151
|
)
|
|
(1,733
|
)
|
||
Increase due to accretion expense
|
161
|
|
|
20
|
|
||
Other
|
50
|
|
|
(4
|
)
|
||
Warranty obligations, end of period
|
$
|
34,163
|
|
|
$
|
30,728
|
|
Less current portion
|
$
|
(7,550
|
)
|
|
$
|
(5,894
|
)
|
Noncurrent
|
$
|
26,613
|
|
|
$
|
24,834
|
|
•
|
Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of such assets or liabilities do not entail a significant degree of judgment.
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•
|
Level 2—Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
|
•
|
Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
|
|
Fair Value
Hierarchy |
|
March 31,
2015 |
|
December 31,
2014 |
||||
Assets:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Level 2
|
|
$
|
59
|
|
|
$
|
76
|
|
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Level 2
|
|
$
|
—
|
|
|
$
|
—
|
|
Warranty obligations
|
Level 3
|
|
4,783
|
|
|
3,562
|
|
||
Contingent consideration
|
Level 3
|
|
2,404
|
|
|
2,300
|
|
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
Balance at beginning of period
|
$
|
3,562
|
|
|
$
|
—
|
|
Accruals for warranties issued during period
|
1,047
|
|
|
571
|
|
||
Changes in estimates
|
—
|
|
|
—
|
|
||
Settlements
|
(36
|
)
|
|
—
|
|
||
Increase due to accretion expense
|
161
|
|
|
20
|
|
||
Other
|
49
|
|
|
(4
|
)
|
||
Balance at end of period
|
$
|
4,783
|
|
|
$
|
587
|
|
Balance—December 31, 2014
|
$
|
2,300
|
|
Revaluations
|
104
|
|
|
Balance—March 31, 2015
|
$
|
2,404
|
|
Item Measured at Fair Value
|
|
Valuation Technique
|
|
Description of Significant Unobservable Input
|
|
Percent Used
(Weighted-Average)
|
Warranty obligations for microinverters sold since January 1, 2014
|
|
Discounted cash flows
|
|
Profit element and risk premium
|
|
17%
|
|
|
Credit-adjusted risk-free rate
|
|
18%
|
||
|
|
|
|
|
|
|
Contingent consideration liability
|
|
Probability-weighted discounted cash flows
|
|
Risk-adjusted discount rate
|
|
18%
|
|
March 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Goodwill
|
$
|
3,745
|
|
|
$
|
—
|
|
|
$
|
3,745
|
|
|
$
|
3,745
|
|
|
$
|
—
|
|
|
$
|
3,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other indefinite-lived intangibles
|
$
|
286
|
|
|
$
|
—
|
|
|
$
|
286
|
|
|
$
|
286
|
|
|
$
|
—
|
|
|
$
|
286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Intangibles assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
900
|
|
|
(45
|
)
|
|
855
|
|
|
900
|
|
|
—
|
|
|
900
|
|
||||||
Patents
|
750
|
|
|
(187
|
)
|
|
563
|
|
|
750
|
|
|
(125
|
)
|
|
625
|
|
||||||
Total
|
$
|
1,650
|
|
|
$
|
(232
|
)
|
|
$
|
1,418
|
|
|
$
|
1,650
|
|
|
$
|
(125
|
)
|
|
$
|
1,525
|
|
Year
|
|
(In thousands)
|
||
2015 (remaining 9 months)
|
|
$
|
323
|
|
2016
|
|
430
|
|
|
2017
|
|
305
|
|
|
2018
|
|
180
|
|
|
2019
|
|
180
|
|
|
Total
|
|
$
|
1,418
|
|
|
Number of
Shares
Outstanding
|
|
Weighted-
Average
Exercise Price
per Share
|
|||
Outstanding at December 31, 2014
|
8,632
|
|
|
$
|
4.75
|
|
Granted
|
197
|
|
|
12.17
|
|
|
Exercised
|
(188
|
)
|
|
3.65
|
|
|
Canceled
|
(45
|
)
|
|
9.83
|
|
|
Outstanding at March 31, 2015
|
8,596
|
|
|
4.92
|
|
|
RSUs
|
|
Weighted Average
Fair Value per Share at Grant Date |
|||
Outstanding at December 31, 2014
|
1,345
|
|
|
$
|
8.25
|
|
Granted
|
450
|
|
|
13.05
|
|
|
Vested
|
(172
|
)
|
|
8.04
|
|
|
Canceled
|
—
|
|
|
|
|
|
Outstanding at March 31, 2015
|
1,623
|
|
|
9.60
|
|
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
Cost of revenues
|
$
|
264
|
|
|
$
|
149
|
|
Research and development
|
1,079
|
|
|
613
|
|
||
Sales and marketing
|
765
|
|
|
532
|
|
||
General and administrative
|
880
|
|
|
719
|
|
||
Total
|
$
|
2,988
|
|
|
$
|
2,013
|
|
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
Stock options and restricted stock units
|
$
|
2,526
|
|
|
$
|
1,839
|
|
Employee stock purchase plan
|
462
|
|
|
174
|
|
||
Total
|
$
|
2,988
|
|
|
$
|
2,013
|
|
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
Weighted average grant date fair value
|
$
|
6.89
|
|
|
$
|
3.99
|
|
Expected term (in years)
|
4.6
|
|
|
4.6
|
|
||
Expected volatility
|
71.1
|
%
|
|
62.2
|
%
|
||
Annual risk-free rate of return
|
1.3
|
%
|
|
1.4
|
%
|
||
Dividend yield
|
0.0
|
%
|
|
0.0
|
%
|
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
Numerator:
|
|
|
|
||||
Net loss
|
$
|
(6,320
|
)
|
|
$
|
(6,236
|
)
|
Denominator:
|
|
|
|
||||
Weighted average number of common shares outstanding
|
43,950
|
|
|
42,205
|
|
||
|
|
|
|
||||
Net loss per share, basic and diluted
|
$
|
(0.14
|
)
|
|
$
|
(0.15
|
)
|
|
Three Months Ended
March 31, |
||||
|
2015
|
|
2014
|
||
Employee stock options
|
8,627
|
|
|
8,489
|
|
Restricted stock units
|
1,433
|
|
|
732
|
|
Warrants to purchase common stock
|
111
|
|
|
293
|
|
Total
|
10,171
|
|
|
9,514
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
March 31,
|
|
Change in
|
|||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net revenues
|
$
|
86,653
|
|
|
$
|
57,580
|
|
|
$
|
29,073
|
|
|
50
|
%
|
|
Three Months Ended
March 31, |
||||||
|
2015
|
|
2014
|
||||
|
(In thousands)
|
||||||
Net cash (used in) provided by operating activities
|
$
|
(11,498
|
)
|
|
$
|
4,281
|
|
Net cash used in investing activities
|
(3,611
|
)
|
|
(2,172
|
)
|
||
Net cash provided by (used in) financing activities
|
677
|
|
|
(412
|
)
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
•
|
market acceptance of solar PV systems based on our product platform;
|
•
|
cost competitiveness, reliability and performance of solar PV systems compared to conventional and non-solar renewable energy sources and products;
|
•
|
availability and amount of government subsidies and incentives to support the development and deployment of solar energy solutions;
|
•
|
the extent to which the electric power industry and broader energy industries are deregulated to permit broader adoption of solar electricity generation;
|
•
|
the cost and availability of key raw materials and components used in the production of solar PV systems;
|
•
|
prices of traditional utility-provided energy sources;
|
•
|
levels of investment by end-users of solar energy products, which tend to decrease when economic growth slows; and
|
•
|
the emergence, continuance or success of, or increased government support for, other alternative energy generation technologies and products.
|
•
|
changes in customer, geographic or product mix;
|
•
|
increased price competition, including the impact of customer discounts and rebates;
|
•
|
ability to reduce and control product costs;
|
•
|
warranty costs and reserves, including changes resulting from changes in estimates related to the long-term performance of our products, product replacement costs and warranty claim rates;
|
•
|
loss of cost savings due to changes in component or raw material pricing or charges incurred due to inventory holding periods if product demand is not correctly anticipated;
|
•
|
introduction of new products;
|
•
|
ordering patterns from our distributors;
|
•
|
price reductions on older products to sell remaining inventory;
|
•
|
our ability to reduce production costs, such as through technology innovations, in order to offset price declines in older products over time;
|
•
|
changes in shipment volume;
|
•
|
changes in distribution channels;
|
•
|
excess and obsolete inventory and inventory holding charges;
|
•
|
expediting costs incurred to meet customer delivery requirements; and
|
•
|
fluctuations in foreign currency exchange rates.
|
•
|
our ability to timely introduce and complete new designs and timely qualify and certify our products;
|
•
|
whether installers, system owners and solar financing providers will continue to adopt our microinverter systems, which is a relatively new technology with a limited history with respect to reliability and performance;
|
•
|
whether installers, system owners and solar financing providers will be willing to purchase microinverter systems from us given our limited operating history;
|
•
|
the ability of prospective system owners to obtain long-term financing for solar PV installations based on our product platform on acceptable terms or at all;
|
•
|
our ability to produce microinverter systems that compete favorably against other solutions on the basis of price, quality, reliability and performance;
|
•
|
our ability to develop products that comply with local standards and regulatory requirements, as well as potential in-country manufacturing requirements; and
|
•
|
our ability to develop and maintain successful relationships with our customers and suppliers.
|
•
|
manage a larger organization;
|
•
|
expand third-party manufacturing, testing and distribution capacity;
|
•
|
build additional custom manufacturing test equipment;
|
•
|
manage an increasing number of relationships with customers, suppliers and other third parties;
|
•
|
increase our sales and marketing efforts;
|
•
|
train and manage a growing employee base;
|
•
|
broaden our customer support capabilities;
|
•
|
implement new and upgrade existing operational and financial systems; and
|
•
|
enhance our financial disclosure controls and procedures.
|
•
|
acceptance of microinverters in markets in which they have not traditionally been used;
|
•
|
our ability to compete in new product markets to which we are not accustomed;
|
•
|
our ability to manage an increasing manufacturing capacity and production;
|
•
|
willingness of our potential customers to incur a higher upfront capital investment than may be required for competing solutions;
|
•
|
our ability to develop solutions to address the requirements of the larger commercial and utility-scale markets;
|
•
|
timely qualification and certification of new products for larger commercial and utility-scale installations;
|
•
|
our ability to reduce production costs in order to price our products competitively over time;
|
•
|
availability of government subsidies and economic incentives for solar energy solutions;
|
•
|
accurate forecasting and effective management of inventory levels in line with anticipated product demand; and
|
•
|
our customer service capabilities and responsiveness.
|
•
|
differing regulatory requirements, including tax laws, trade laws, labor, safety, local content, recycling and consumer protection regulations, tariffs, export quotas, customs duties or other trade restrictions;
|
•
|
limited or unfavorable intellectual property protection;
|
•
|
risk of change in international political or economic conditions;
|
•
|
restrictions on the repatriation of earnings;
|
•
|
fluctuations in the value of foreign currencies and interest rates;
|
•
|
difficulties and increased expenses in complying with a variety of U.S. and foreign laws, regulations and trade standards, including the Foreign Corrupt Practices Act;
|
•
|
potentially longer sales cycles;
|
•
|
higher volume requirements;
|
•
|
increased customer concentrations;
|
•
|
warranty expectations and product return policies; and
|
•
|
cost, performance and compatibility requirements.
|
•
|
obtain from a third party claiming infringement a license to sell or use the relevant technology, which may not be available on reasonable terms, or at all;
|
•
|
stop manufacturing, selling, incorporating or using our products that embody the asserted intellectual property;
|
•
|
pay substantial monetary damages;
|
•
|
indemnify our customers pursuant to indemnification obligations under some of our customer contracts; or
|
•
|
expend significant resources to redesign the products that use the infringing technology and to develop or acquire non-infringing technology.
|
•
|
invest in our research and development efforts by hiring additional technical and other personnel;
|
•
|
expand our operations into new product markets and new geographies;
|
•
|
acquire complementary businesses, products, services or technologies; or
|
•
|
otherwise pursue our strategic plans and respond to competitive pressures.
|
•
|
fluctuations in demand for our products;
|
•
|
the timing, volume and product mix of sales of our products, which may have different average selling prices or profit margins;
|
•
|
changes in our pricing and sales policies or the pricing and sales policies of our competitors;
|
•
|
our ability to design, manufacture and deliver products to our customers in a timely and cost-effective manner and that meet customer requirements;
|
•
|
our ability to manage our relationships with our contract manufacturers, customers and suppliers;
|
•
|
quality control or yield problems in our manufacturing operations;
|
•
|
the anticipation, announcement or introductions of new or enhanced products by our competitors and ourselves;
|
•
|
reductions in the retail price of electricity;
|
•
|
changes in laws, regulations and policies applicable to our business and products, particularly those relating to government incentives for solar energy applications;
|
•
|
unanticipated increases in costs or expenses;
|
•
|
the amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our business operations;
|
•
|
the impact of government-sponsored programs on our customers;
|
•
|
our exposure to the credit risks of our customers, particularly in light of the fact that some of our customers are relatively new entrants to the solar market without long operating or credit histories;
|
•
|
our ability to estimate future warranty obligations due to product failure rates, claim rates or replacement costs;
|
•
|
our ability to forecast our customer demand and manufacturing requirements, and manage our inventory;
|
•
|
fluctuations in our gross profit;
|
•
|
our ability to predict our revenue and plan our expenses appropriately; and
|
•
|
fluctuations in foreign currency exchange rates.
|
•
|
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;
|
•
|
not providing for cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
|
•
|
authorizing our board of directors to issue, without stockholder approval, preferred stock rights senior to those of common stock, which could be used to significantly dilute the ownership of a hostile acquiror;
|
•
|
prohibiting stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
|
•
|
requiring the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of voting 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, forum selection and the liability of our directors, or to amend our bylaws, which may inhibit the ability of stockholders or an acquiror to effect such amendments to facilitate changes in management or an unsolicited takeover attempt;
|
•
|
requiring special meetings of stockholders may only be called by our chairman of the board, if any, our chief executive officer, our president or a majority of our board of directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and
|
•
|
requiring advance notification of stockholder nominations and proposals, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
|
ENPHASE ENERGY, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ Kris Sennesael
|
|
|
|
Kris Sennesael
|
|
|
|
Vice President and Chief Financial Officer
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Enphase Energy, Inc.
(1)
|
|
|
|
3.2
|
|
Amended and Restated Bylaws of Enphase Energy, Inc.
(2)
|
|
|
|
4.1
|
|
Specimen Common Stock Certificate of Enphase Energy, Inc.
(3)
|
|
|
|
4.2
|
|
2010 Amended and Restated Investors’ Rights Agreement by and between Enphase Energy, Inc. and the investors listed on Exhibit A thereto, dated March 15, 2010, as amended.
(3)
|
|
|
|
4.3
|
|
Form of June 2011 Warrant to Purchase Common Stock of Enphase Energy, Inc., pursuant to that certain Amended and Restated Subordinated Convertible Loan Facility and Security Agreement.
(3)
|
|
|
|
4.4
|
|
Form of November 2011 Warrant to Purchase Common Stock of Enphase Energy, Inc., pursuant to that certain Amended and Restated Subordinated Convertible Loan Facility and Security Agreement.
(3)
|
|
|
|
10.1
|
|
Master Development & Product Agreement by and between the Company and Fujitsu Microelectronics America, Inc., dated August 19, 2009.
|
|
|
|
10.2***
|
|
Amendment No. 1 to Long Term Product Supply Agreement by and between the Company and Vivint Solar Developer, LLC, dated March 3, 2015.
|
|
|
|
10.3
|
|
Amendment No. 2 to Credit Agreement by and among the Company, the lenders identified on the signature pages thereto and Wells Fargo Bank, National Association, dated February 2, 2015.
|
|
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Document.
|
(1)
|
Previously filed as Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35480), filed with the Securities and Exchange Commission on April 6, 2012, and incorporated by reference herein.
|
(2)
|
Previously filed as Exhibit 3.5 to Amendment No. 7 to the Registration Statement on Form S-1/A (File No. 333-174925), filed with the Securities and Exchange Commission on March 12, 2012, and incorporated by reference herein.
|
(3)
|
Previously filed as the like-numbered exhibit to the Registration Statement on Form S-1/A (File No. 333-174925), and incorporated herein by reference.
|
*
|
The certifications attached as Exhibit 32.1 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by Enphase Energy, Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
***
|
Material in the exhibit marked with three asterisks (***) has been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Securities and Exchange Commission.
|
1.
|
PURPOSE OF AGREEMENT
|
2.
|
DEFINITIONS
|
a.
|
Development Task Order (“Task Order” - Exhibit A):
This document sets forth the terms under which Seller will develop the Product, including the Statement of Work and the Nonrecurring Engineering Charges (“NRE”).
|
b.
|
Change Order (Exhibit B):
This document allows the Buyer and Seller to agree to changes to the Task Order.
|
c.
|
Risk and annual ASIC Production Terms (“APT” - Exhibit C):
This document provides the terms under which Buyer authorizes Seller to manufacture and deliver an ASIC in development under this Agreement prior to Buyer having provided written approval of engineering samples (“Engineering Samples” or “ES”'). Also, this document provides the specific terms for the production of each ASIC manufactured under this
Agreement.
|
d.
|
Design Specifications (“Specifications”):
This refers to the terms set forth in the Design Specifications Summary and in Buyer's approved post-layout simulation results based on final netlist.
|
e.
|
Register Transfer Language (“RTL”):
A high-level description ASIC language provided by Buyer if the interface is “ RTL Handoff.”
|
f.
|
Timing Constraints:
Chip input, chip output and chip internal timing requirements.
|
g.
|
Synthesis:
This process converts RTL to a netlist based on Seller's ASIC components library. Synthesis is done by Seller since this is an RTL-Handoff.
|
h.
|
Design Specifications Summary (Exhibit D):
This document is used by Buyer to set forth the technical information necessary to define the manufacture of the final Product.
|
i.
|
Floor Planning and Trial Place and Route Phase:
Phase begins when Seller accepts or begins work on a partial or complete RTL. The RTL will be synthesized and the synthesized netlist may be used to make and verify component placement information. Phase continues until Seller accepts or begins work on agreed-to final RTL.
|
j.
|
Approval to Start Final Place and Route Sheet:
This document authorizes Seller to begin final place and/or route when the criteria in the document are met. The execution of this form is a pre-requisite lo start the final layout of the Product.
|
k.
|
Final Place and Route Phase:
Phase begins with Seller's acceptance of final RTL.
|
l.
|
Timing Data Extraction:
Delay information pertaining to the ASIC, extracted from the layout. Final timing data extraction is the first one provided after Final Place and Route Phase starts that meets the agreed to Timing Constraints set when entering the Final Place and Route Phase.
|
m.
|
Layout Data Verification:
Seller verifies that the ASIC obeys physical manufacturing rules and the layout functionally matches the Buyer's circuit.
|
n.
|
Post-Layout Approval Sheet:
This document sets forth the post-layout output from the Seller's design verification tools and allows Buyer and Seller to indicate whether the data are acceptable and within the Buyer's Specifications. The execution of this form is a prerequisite to tapeout and mask making for the Product and shall be deemed to incorporate Buyer's Design Specifications Summary and Buyer's approved post-layout results.
|
o.
|
Approval to Move to Mass Production:
The Buyer must indicate approval in writing to move production control from Seller's engineering to Seller's production control. The execution of this form is a prerequisite to mass production of the Product. This form may be signed by either the
VP
of Operations or the Vice President of Engineering of Buyer, with the individuals currently holding such titles shown on Exhibit E.
|
p.
|
Statement of Work (“SOW” - Exhibit F):
It defines technical deliverables and responsibilities. It contains detailed schedules of ASIC design project. Subsequent SOWs may be executed as Exhibit F-1, F-2, etc.
|
q.
|
Product:
Semiconductor ASIC (Application Specific Integrated Circuit) device supplied by Seller in accordance with the terms and conditions of this Agreement.
|
3.
|
TERM
|
4.
|
DEVELOPMENT PRODUCT
|
Item
|
|
Activity
|
|
Cost
|
||
1
|
|
Project Kickoff (paid)
|
|
$
|
80,000.00
|
|
2
|
|
RTL Handoff (paid)
|
|
$
|
48,000.00
|
|
3
|
|
IP Development
|
|
$
|
8,000.00
|
|
4
|
|
SDF Delivery & Timing Closure
|
|
$
|
8,000.00
|
|
5
|
|
Tapeout
|
|
$
|
8,000.00
|
|
6
|
|
Engineering Samples
|
|
$
|
8,000.00
|
|
|
|
Total
|
|
$
|
160,000.00
|
|
Item
|
|
Activity
|
|
Cost
|
||
1
|
|
Project Kickoff (paid)
|
|
$
|
100,000.00
|
|
2
|
|
RTL Handoff (paid)
|
|
$
|
60,000.00
|
|
3
|
|
IP Development
|
|
$
|
10,000.00
|
|
4
|
|
SDF Delivery & Timing Closure
|
|
$
|
10,000.00
|
|
5
|
|
Tapeout
|
|
$
|
10,000.00
|
|
6
|
|
Engineering Samples
|
|
$
|
10,000.00
|
|
|
|
Total
|
|
$
|
200,000.00
|
|
•
|
A Risk CS is a production graded commercial sample that Buyer may take at its own risk before complete ES approval
|
•
|
All orders for Risk CS are non-cancelable
|
•
|
The Risk CS materials will be purchased at or before the tape out, and are expected to be fabricated at the same time as the first ES/AES fabrication
|
•
|
Under the terms of a separate agreement, Seller has provided its 180nm cell based design kit to Buyer, who will use this design kit to verify the design.
|
•
|
Seller to perform logic and design rule checks.
|
•
|
Buyer to review and validate the design.
|
•
|
After final layout and post layout simulation, Seller will complete the Final Post-Layout approval sheet and Design Specifications of the design for Buyer approval and signature.
|
•
|
- Buyer to supply functional vectors if necessary.
|
•
|
- Seller to provide logic SCAN/RAM BJST/JTAG/test bus (PLL).
|
•
|
- Seller to perform ATPG and Fault Simulation if necessary.
|
•
|
- Seller to develop wafer sort and final test programs.
|
•
|
- Seller will perform analog IP testing.
|
•
|
- Seller will provide the test RTL required for testing the parts on wafer and Buyer will integrate the RTL and deliver the final RTL to Seller.
|
•
|
Seller will generate the photo masks, and fabricate prototype wafers.
|
•
|
Seller will generate the specific production test program if required.
|
•
|
Seller will deliver 20 Engineering Samples (10 of Raven and 10 of Jay) to Customer.
|
•
|
Seller may deliver AES to Customer upon request prior to tape-out.
|
p,
|
THE ENGINEERING SAMPLES DELIVERED TO BUYER HEREUNDER ARE FOR VALIDATION PURPOSES ONLY. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN SECTION 4 (o) OF THIS AGREEMENT, ALL WARRANTIES WITH RESPECT TO
|
1)
|
Buyer will notify Seller promptly in writing of any claims if a Product is or becomes defective during the warranty period.
|
2)
|
Buyer will follow Seller’s Return Material Authorization procedures if Seller advises Buyer to return a defective Product for replacement.
|
3)
|
Buyer will reimburse Seller for all reasonable expenses incurred by Seller for shipping, handling, and inspection of such Product alleged by Buyer to be defective if such Product is either (i) not under warranty, or (ii) is finally determined not to be defective, or (iii) is defective due to any cause or condition not covered under the warranty provided herein. With respect to clause (ii), if Seller disagrees with Buyer’s determination that such Product is defective, Seller shall so notify Buyer in writing within thirty (30) days. In such event, Seller and Buyer shall meet in good faith to attempt to resolve the
|
1)
|
Seller retains all intellectual property rights in its own intellectual property. Seller will indemnify, defend and hold Buyer harmless against all expenses, damages, costs or losses, including reasonable attorneys’ fees, resulting from a suit or proceeding brought by a third party which claims that the Product or any part thereof, or the Seller IP or any part thereof, or the process technology or methodology used to manufacture the Product, infringes any copyright, patent trademark, mask work, trade secret, or other intellectual property right. For clarity, Seller will indemnify Buyer for such claims if Seller-selected processes, materials or IP and/or Seller-selected claim elements (collectively, “Seller Selections”) are sufficient (in and of themselves. and not requiring combination with Buyer Selections (as defined in subparagraph (2) below)) to support such alleged infringement claim. Seller will have no duty
|
c.
|
INDEPENDENT OF ANY OTHER LIMITATION HEREIN AND REGARDLESS OF WHETHER THE PURPOSE OF SUCH LIMITATION IS SERVED, IT IS AGREED THAT IN NO EVENT WILL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR INDIRECT DAMAGES. FOR CLARITY, THERE IS NO LIMITATION ON EITHER PARTY’S (1) LIABILITY FOR BREACH OR OTHER VIOLATION OF ITS OBLIGATIONS REGARDING THE OTHER PARTY’S CONFIDENTIAL INFORMATION AND/OR
|
BUYER:
|
Enphase Energy, Inc.
|
|
SELLER:
|
Fujitsu Microelectronics America, Inc
|
BY:
|
/s/ Paul Nahi
|
|
BY:
|
/s/ Steve Della Rocchetta
|
PRINT NAME:
|
Paul Nahi
|
|
PRINT NAME:
|
Steve Della Rocchetta
|
PRINT TITLE:
|
CEO
|
|
PRINT TITLE:
|
VP Sales & Marketing
|
DATE:
|
8/27/2009
|
|
DATE:
|
8/27/2009
|
Title:
|
Associate General Counsel and Assistant Secretary
|
Model Number
|
Description
|
Unit Price
|
MOQ
|
Microinverters
|
|
|
|
M215-60-2LL-S22
1
|
Microinverter, 240 & 208Vac, for 60-cell modules, MC-style PV connector
|
[***]
|
1 Box x 12 Units
|
M250-60-2LL-S22
2
|
Microinverter, 240 & 208Vac, for 60-cell modules, MC-style PV connector
|
[***]
|
1 Box x 12 Units
|
n/a
|
5 Year Extended Warranty Upgrade
|
[***]
|
|
Communications Gateway
|
|
|
|
ENV-120-01 VM
|
Envoy Communications Gateway,120VAC, with Ethernet Bridge pair
|
[***]
3
|
1 Box x 6 Units
|
RGM-MTR-01
|
Enphase-compatible GE i210+ Revenue Grade Meter (RGM) with integrated ZigBee wireless
4
|
[***]
|
1 Box x 4 Units
|
RGM-ZGB-01
|
ZigBee USB stick for Enphase Envoy communication with RGM
|
[***]
|
1 Box x 4 Units
|
Service Fee for Enlighten
|
|
|
|
|
Per Envoy per year for [***] years
|
[***]
5
|
|
Cables
|
|
|
|
ET10-240-BULK
|
240VAC Trunk Cable, 240 Connectors, Portrait
|
[***]
|
1 Box (240 Connectors)
|
ET17-240-BULK
|
240VAC Trunk Cable, 240 Connectors, Landscape
|
[***]
|
1 Box (240 Connectors)
|
Cables
|
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ET-TERM-10
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Branch Terminator - (QTY 10 Units/Bag)
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[***]
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1 Box x 10 Bags
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ET-DISC-05
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Table Disconnect Tool - (QTY 5 Units/Bag)
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[***]
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1 Box x 20 Bags
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ET-SEAL-10
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Sealing Cap - (QTY 10 Units/Bag)
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[***]
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1 Box x 10 Bags
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ET-SPLK-05
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Engage Coupled - (QTY 5 Units/Bag)
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[***]
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1 Box x 5 Bags
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(1
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)
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Includes integrated ground.
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(2
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)
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Includes integrated ground.
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(3
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)
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Seller will provide the Envoy Communications Gateway to Buyer [***].
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(4
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)
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Seller will sell to Buyer [***] RGMs at [***].
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(5
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)
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For each System incorporating an Envoy Communications Gateway, Seller will provide to Buyer access to Enlighten, a non-cancellable, non-refundable service provided by Seller. For the Enlighten service, Buyer will pay to Seller [***] per System per year for [***] even if Buyer discontinues use of the Enlighten service. The Enlighten service will commence upon activation of an Envoy and continue for the life of the Envoy. Buyer will have access to Enlighten and Enlighten API for the life of the Envoy, provided that the Envoy is connected to the Internet. Seller will send an invoice to Buyer each year on the anniversary of the date each System was activated with the Enlighten service. For example, for all Envoys delivered to Buyer during the month of [***], Seller will send an invoice to Buyer at the [***]. Seller shall deliver such invoices for the foregoing Enlighten service fees separate from any other invoice delivered to Buyer.
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Section 1.
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AMENDMENTS TO THE CREDIT AGREEMENT
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Section 2.
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CONDITIONS PRECEDENT
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Section 3.
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BORROWER’S REPRESENTATIONS AND WARRANTIES
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Section 4.
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MISCELLANEOUS
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By:
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/s/ Kris Sennesael
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Name: Kris Sennesael
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Title: CFO
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By:
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/s/ Patrick McCormack
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Name: Patrick McCormack
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Title: Authorized Signatory
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1.
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I have reviewed this Form 10-Q of Enphase Energy, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
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a.
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Paul B. Nahi
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Paul B. Nahi
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President and Chief Executive Officer
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(Principal Executive Officer)
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1.
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I have reviewed this Form 10-Q of Enphase Energy, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
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a.
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Kris Sennesael
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Kris Sennesael
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Vice President and Chief Financial Officer
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(Principal Financial Officer)
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/s/ Paul B. Nahi
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/s/ Kris Sennesael
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Paul B. Nahi
President and Chief Executive Officer
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Kris Sennesael
Vice President and Chief Financial Officer
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