Disposition of SPI China |
| 4. | Disposition
of SPI China |
On August 30, 2018, the Group
entered into a share purchase agreement (the “SPI China disposal agreement”) with Lighting Charm, an affiliate of Ms.
Shan Zhou, the spouse of Xiaofeng Peng, the Group’s Chairman of the Board of Directors and Chief Executive Officer. Ms. Shan
Zhou, as the beneficial owner of the Group, hold more than 10% equity interest of the Group on December 10, 2018. The agreement
has been approved by an independent committee of the Group’s Board of Directors. The SPI China disposal agreement provides
that the Group sold Lighting Charm the 100% equity interest of SPI China, which holds all of the Group’s assets and liabilities
related to its business in China (the “Acquired Business”). The Group effected an internal restructuring following
which SPI China would only hold the Group’s subsidiaries in China, and all the other subsidiaries outside of China would
be transferred to the Group. Pursuant to the terms of the SPI China disposal agreement, the consideration for the Acquired Business
to be paid by the Lighting Charm to the Group in cash was US$1.00. As of December 10, 2018, the restructuring was completed and
the disposition was closed. As a result of the disposition to a principal shareholder for US$1.00, the excess of SPI China’s
book value of liabilities over the book value of its assets was recorded as an addition to paid-in capital of $107,867.
Together with the transaction,
the Group granted Lighting Charm options to purchase up to 1,000,000 of the Group’s ordinary shares with par value of $0.0001,
with an exercise price of US$ 3.80 per share. The options vested immediately and can be exercised at any time on or prior to August
21, 2021. The options were valued using the Binomial option pricing model and the fair value of the options on the grant date
was $1,260, which adjusted to the fair value of disposal consideration and was charged into additional paid-in capital.
The Group had made payment on behalf of SPI China
for its operation purpose from December 10, 2018 to December 31, 2018, which was considered remote collectability due to the financial
position of SPI China, and the Company recorded the amount due from SPI China as a debt forgiveness loss from related parties,
with amount of $536 recorded as a reduction of paid-in capital.
The assets and liabilities
of SPI China are included in the captions “Current assets of discontinued operations”, “Noncurrent assets of
discontinued operations”, “Current liabilities of discontinued operations” and “Noncurrent liabilities
of discontinued operations”, in the accompanying balance sheets at December 31, 2017 and consist of the following:
| |
December 31,
2017 | |
Assets of Discontinued Operations | |
| | |
Cash and cash equivalents | |
$ | 339 | |
Restricted cash | |
| 1,017 | |
Accounts receivable, net | |
| 33,365 | |
Prepaid expenses and other current assets, net | |
| 13,778 | |
Finance lease receivable, net | |
| 3,816 | |
Other current assets | |
| 118 | |
Total current assets | |
| 52,433 | |
Other receivable, noncurrent | |
| 5,008 | |
Property, plant and equipment, net | |
| 37,936 | |
Project assets, noncurrent | |
| 11,680 | |
Deferred tax assets, net | |
| 299 | |
Finance lease receivable, noncurrent | |
| 5,959 | |
Total noncurrent assets | |
| 60,882 | |
Total assets | |
$ | 113,315 | |
| |
| | |
Liabilities of Discontinued Operations | |
| | |
Accounts payable | |
$ | 39,401 | |
Accounts payable, related parties | |
| 4,700 | |
Accrued liabilities | |
| 12,950 | |
Income taxes payable | |
| 2,833 | |
Short-term borrowings and current portion of long-term borrowings | |
| 103,248 | |
Financing and capital lease obligations, current | |
| 26,399 | |
Other current liabilities | |
| 23,785 | |
Total current liabilities | |
| 213,316 | |
Long-term borrowings, excluding current portion | |
| 2,378 | |
Other noncurrent liabilities | |
| 755 | |
Total noncurrent liabilities | |
| 3,133 | |
Total liabilities | |
$ | 216,449 | |
The following are revenues
and income from discontinued operations:
| |
For the years ended December 31, | |
| |
2018 | | |
2017 | | |
2016 | |
Net sales | |
$ | 4,681 | | |
$ | 5,945 | | |
$ | 25,597 | |
Cost of goods sold | |
| 2,027 | | |
| 6,235 | | |
| 18,763 | |
Provision for losses on contracts | |
| – | | |
| – | | |
| 18 | |
Gross profit (loss) | |
| 2,654 | | |
| (290 | ) | |
| 6,816 | |
General and administrative | |
| 2,904 | | |
| 8,391 | | |
| 20,523 | |
Sales, marketing and customer service | |
| 887 | | |
| 4,796 | | |
| 25,992 | |
Provision for doubtful accounts, notes and other receivable | |
| 195 | | |
| 7,485 | | |
| 23,359 | |
Impairment charges on goodwill and intangible assets | |
| – | | |
| 205 | | |
| – | |
Impairment charges on property, plant and equipment | |
| – | | |
| 3,755 | | |
| 12,602 | |
Impairment charges on project assets | |
| – | | |
| 3,354 | | |
| 742 | |
Impairment charges on finance lease receivable | |
| – | | |
| 23,967 | | |
| 32,028 | |
Total operating expense | |
| 3,986 | | |
| 51,953 | | |
| 115,246 | |
Total other income (expense), net | |
| (4,790 | ) | |
| (12,188 | ) | |
| (10,779 | ) |
Loss from discontinued operations before income tax | |
| (6,122 | ) | |
| (64,431 | ) | |
| (119,209 | ) |
Income tax expense (benefit) | |
| – | | |
| 14 | | |
| (270 | ) |
Loss from discontinued operations, net of income tax | |
$ | (6,122 | ) | |
$ | (64,445 | ) | |
$ | (118,939 | ) |
|