UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of, December
Commission File Number
(Translation of registrant’s name into English)
Street Isabel la Católica, 8, Door 51,
Valencia, Spain 46004
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F ☒ Form 40-F ☐
EXPLANATORY NOTE
Turbo Energy, S.A. (the “Company”) is furnishing this Form 6-K to provide the unaudited consolidated financial statements for the six months ended June 30, 2023 and 2022.
FORWARD-LOOKING INFORMATION
This Report on Form 6-K contains forward-looking statements and information relating to us that are based on the current beliefs, expectations, assumptions, estimates and projections of our management regarding our company and industry. When used in this report, the words “may”, “will”, “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management’s current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: the volatility of the securities markets, and other risks and uncertainties which are generally set forth under the heading, “Risk Factors” and elsewhere in our Registration Statement on Form F-1 went effective on September 21, 2023 (the “F-1”). Should any of these risks or uncertainties materialize, or should the underlying assumptions about our business and the commercial markets in which we operate prove incorrect, actual results may vary materially from those described as anticipated, estimated or expected in the F-1.
All forward-looking statements included herein attributable to us or other parties or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligations to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: December 22, 2023 | Turbo Energy, S.A. | |
| By: | /s/ Mariano Soria | |
| Mariano Soria | ||
| Chief Executive Officer | ||
2
EXHIBIT INDEX
| Exhibit Number | Description | |
| 99.1 | Unaudited Interim Consolidated Financial Statements as of June 30, 2023 and for the six months ended June 30, 2023 and 2022 | |
| 99.2 | Operating and Financial Review and Prospects in Connection with the Interim Consolidated Financial Statements for the six months ended June 30, 2023 | |
| 99.3 | Press Release dated December 22, 2023 | |
| 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 Linkbase Document | |
| 104 | Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
3
Exhibit 99.1
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TURBO ENERGY, S.A.
Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2023 and 2022
(Unaudited)
(Expressed in Euro)
F-1
TURBO ENERGY, S.A.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited)
(Expressed in Euro)
| As at | Note | June 30, 2023 | December 31, 2022 | |||||||||
| (Unaudited) | ||||||||||||
| Assets | ||||||||||||
| Current | ||||||||||||
| Cash | 2 | € | € | |||||||||
| Accounts receivable, net and other receivables | 4 | |||||||||||
| Inventory, net | 5 | |||||||||||
| Amount due from related parties | 10 | |||||||||||
| Prepaid expense | 6 | |||||||||||
| Deferred offering costs | 16 | |||||||||||
| Total Current Assets | ||||||||||||
| Non- Current Assets | ||||||||||||
| Property and equipment, net | 7 | |||||||||||
| Intangible assets, net | 8 | |||||||||||
| Right-of-use assets | 14 | |||||||||||
| Total Assets | € | € | ||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable and accrued liabilities | 9 | € | € | |||||||||
| Amount due to related parties | 10 | |||||||||||
| Lease liabilities - current portion | 14 | |||||||||||
| Bank loans - current portion | 11 | |||||||||||
| Non-Current Liabilities | ||||||||||||
| Lease liabilities | 14 | |||||||||||
| Bank loans | 11 | |||||||||||
| Total Liabilities | € | € | ||||||||||
| Shareholders’ Equity | ||||||||||||
| Share Capital | 12 | |||||||||||
| Reserve | 13 | |||||||||||
| Retained Earnings (Accumulated Deficit) | ( | ) | ||||||||||
| Total Shareholders’ Equity | ||||||||||||
| Total Liabilities and Shareholders’ Equity | € | € | ||||||||||
Subsequent Events (Note 22)
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
F-2
TURBO ENERGY, S.A.
Condensed Interim Consolidated Statements of Operations
(Unaudited)
(Expressed in Euro)
| Six Months Ended June 30, | ||||||||||
| Note | 2023 | 2022 | ||||||||
| Revenue | 17 | € | € | |||||||
| Revenue - related parties | 10,17 | |||||||||
| Other operating income | ||||||||||
| Total Revenue | ||||||||||
| Cost and Expenses | ||||||||||
| Cost of revenues | 18 | |||||||||
| Cost of revenues - related parties | 10,18 | |||||||||
| Selling and administrative | 19 | |||||||||
| Selling and administrative – related parties | 10,19 | |||||||||
| Salaries and benefits | ||||||||||
| Bad debt expense (recovery) | 4 | ( | ) | |||||||
| Total Cost and Expenses | ||||||||||
| Income (loss) from operations | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||
| Interest expense | ( | ) | ( | ) | ||||||
| Foreign exchange gain (loss) | ( | ) | ||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ||||||
| Net Income (Loss) Before Income Tax | ( | ) | ||||||||
| Income tax | ||||||||||
| - Current | ( | ) | ||||||||
| - Deferred | ||||||||||
| Net Loss (Income) | € | ( | ) | € | ||||||
| € | ( | ) | $ | |||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
F-3
TURBO ENERGY, S.A.
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
(Expressed in Euro)
Six months ended June 30, 2023
| Note | Number of Outstanding Shares | Share Capital | Reserve | Retained Earnings (Accumulated Deficit) | Total Shareholders’ Equity | ||||||||||||||||
| Balance, January 1, 2023 | € | € | € | € | |||||||||||||||||
| Transfer from retained earnings to reserve | 13 | ( | ) | ||||||||||||||||||
| Net loss for the period | ( | ) | ( | ||||||||||||||||||
| Balance, June 30, 2023 | € | € | € | ( | ) | € | |||||||||||||||
Six months ended June 30, 2022
| Note | Number of Outstanding Shares | Share Capital | Reserve | Retained Earnings (Accumulated Deficit) | Total Shareholders’ Equity | ||||||||||||||||
| *Balance, January 1, 2022 | € | € | € | € | |||||||||||||||||
| Transfer from retained earnings to reserve | 13 | ( | ) | ||||||||||||||||||
| Net income for the period | |||||||||||||||||||||
| *Balance, June 30, 2022 | € | € | € | € | |||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
F-4
TURBO ENERGY, S.A.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in Euro)
| Six Months Ended June 30, | ||||||||||||
| Note | 2023 | 2022 | ||||||||||
| Cash Provided by (Used in) | ||||||||||||
| Operating Activities | ||||||||||||
| Net income (loss) before income tax | € | ( | ) | € | ||||||||
| Items not affecting cash: | ||||||||||||
| Bad debt expense (recovery) | 4 | ( | ) | |||||||||
| Depreciation of property and equipment | 7 | |||||||||||
| Amortization of intangible assets | 8 | |||||||||||
| Amortization of right-of-use assets | 14 | |||||||||||
| Accretion of lease liabilities | 14 | |||||||||||
| Changes in non-cash working capital items: | ||||||||||||
| Inventory | ( | ) | ||||||||||
| Accounts receivable | 5 | |||||||||||
| Due from related parties | 10 | ( | ) | |||||||||
| Due to related parties | 10 | ( | ) | ( | ) | |||||||
| Prepaid expense | 6 | ( | ) | ( | ) | |||||||
| Deferred offering costs | 16 | ( | ) | |||||||||
| Deferred tax assets | ||||||||||||
| Accounts payable and accrued liabilities | 9 | ( | ) | ( | ) | |||||||
| Income tax payable | ( | ) | ||||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||||||
| Investing Activities | ||||||||||||
| Purchase of equipment | 7 | ( | ) | ( | ) | |||||||
| Purchase of intangible assets | 8 | ( | ) | ( | ) | |||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||||
| Financing Activities | ||||||||||||
| Proceeds (Repayment) of bank loans | 11 | ( | ) | ( | ) | |||||||
| Net proceeds from lines of credit | 11 | ( | ) | |||||||||
| Repayment of lease liabilities | 14 | ( | ) | ( | ) | |||||||
| Dividend paid to related party | 10 | ( | ) | |||||||||
| Payments to related parties | 10 | ( | ) | ( | ) | |||||||
| Proceeds from related parties | 10 | |||||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||||||
| Net change in cash | ( | ) | ( | ) | ||||||||
| Cash - beginning of period | ||||||||||||
| Cash - end of period | € | € | ||||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
F-5
TURBO ENERGY, S.A.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
Six Months Ended June 30, 2023 and 2022
(Expressed in Euro)
NOTE 1 – ENTITY INFORMATION
Turbo Energy, S.A. (the “Company), was incorporated under the name of Distritech Solutions S.L. on September 18, 2013 under the laws of the Kingdom of Spain. The company then changed its name to Solar Rocket S.L. on October 7, 2013. On April 8, 2021, Solar Rocket S.L. merged with a Spanish corporation Turbo Energy S.L.U. Turbo Energy S.L.U then became a wholly owned subsidiary of Solar Rocket S.L. This merger was approved by the Board of Directors of both companies. Following the merger, the company changed its name to Turbo Energy S.L. on April 8, 2021. On February 8, 2023, we transformed the company from a Spanish unipersonal limited company to a Spanish limited stock company. As such, our company’s name was changed to Turbo Energy S.A.
The corporate purpose of the Company, in accordance with its bylaws, consists of the acquisition, distribution and sale of electrical and electronic material for the development of renewable energy projects, such as solar panels, inverters, chargers, regulators, batteries and structures, among others. We design, develop, and distribute equipment for the generation, management, and storage of photovoltaic energy. Our energy storage products are managed, from the cloud and through the inverter of the installation, by an advanced software system which is optimized by artificial intelligence (“AI”). The key advantage is that our products, comparing to conventional battery storage systems, reduce electricity bill and protect the installation from power outages. Currently, we primarily sell inverters, batteries, and photovoltaic modules to installers and other distributors for residential consumers located in Spain.
The Company is part of the Umbrella Solar Investment Group, whose main shareholder is Crocodile Investment, S.L.U, (hereinafter, the ultimate partner), with registered office in Valencia. The majority shareholder of the Turbo Energy, S.A is Umbrella Solar Investment, S.A (hereinafter, the majority shareholder), which is part of the Umbrella Solar Investment Group.
On November 8, 2022, Turbo Energy S.A. with the
purpose to develop a new business in the field of self-consumption of electricity, acquired the
Merger by absorption process
On April 8, 2021, the merger of Solar Rocket, S.L. (absorbing company) and Turbo Energy, S.L.U. (absorbed company) was formalized in a public deed, being registered in the Mercantile Registry of Valencia on August 9, 2021. The merger process, approved by the respective shareholders’ meetings on June 30, 2020, consisted of the extinction without liquidation of the absorbed company, transferring its assets and liabilities en bloc to the absorbing company, which acquired, by universal succession, the rights and obligations of the absorbed company. The Company recorded the assets and liabilities contributed by the absorbed companies at the values established in the accounting regulations in force at that time. The consolidated financial statements for the year 2021 include the information required by the regulations in relation to the aforementioned merger process.
On the same date of the merger described above, the absorbing company (Solar Rocket, S.L.) changed its corporate name to Turbo Energy, S.L.U. as described above.
F-6
NOTE 2 – MATERIAL ACCOUNTING POLICIES
Basis of presentation
The notes presented in our condensed unaudited interim consolidated financial statements include only significant events and transactions and are not fully inclusive of all matters normally disclosed in our annual audited financial statements; thus, our unaudited interim consolidated financial statements are referred to as condensed. Our unaudited condensed interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 202, included in the Company’s F-1/A as filed with the Securities and Exchange Commission on September 18, 2023.
The unaudited condensed interim consolidated financial statements of Turbo Energy, S.A. have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS. The consolidated financial statements comply with IFRS as issued by the International Accounting Standards Board (“IASB”). Our condensed interim consolidated financial statements comply with International Accounting Standard 34, Interim Financial Reporting and reflect all adjustments (which are of a normal recurring nature) that are, in our opinion, necessary for a fair statement of the results for the interim periods presented.
These consolidated financial statements were approved by the board of directors of the Company on December 22nd, 2023.
The consolidated financial statements of the Company were prepared on a historical cost basis except where certain financial instruments that are required to be measured at fair value. These consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
The consolidated financial statements are presented in Euro, which is the Company’s functional currency. Transactions in currencies other than the functional currency are recorded in accordance with the policies stated under Foreign Currency Transaction in note 2.
Reclassification
Certain amounts from prior period have been reclassified to conform to the current period presentation. These reclassifications had no impact on reported operating and net loss.
Revenue recognition
The Company design, develop, and distribute equipment for the generation, management, and storage of photovoltaic energy. Our energy storage products are managed, from the cloud and through the inverter of the installation, by an advanced software system which is optimized by artificial intelligence (“AI”). The key advantage is that our products, comparing to conventional battery storage systems, reduce electricity bill and protect the installation from power outages.
The Company’s revenue is primarily generated from sales of the inverters, batteries, and photovoltaic modules to installers and other distributors for residential consumers under individual customer purchase orders, some of which have underlying master sales agreements that specify terms governing the product sales.
The Company recognizes such revenue at the point in time when control of the products is transferred to the customer at the estimated net consideration for which collection is probable, taking into account the customer’s rights to unit rebates, and rights to return unsold product.
Transfer of control occurs either when products are shipped to or received by the distributor or direct customer, based on the terms of the specific agreement with the customer, if the Company has a present right to payment and transfer of legal title and the risks and rewards of ownership to the customer has occurred. For most of the Company’s product sales, transfer of control occurs upon shipment to the distributor or direct customer. In assessing whether collection of consideration from a customer is probable, the Company considers the customer’s ability and intention to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 to 60 days from the invoice date, which occurs on the date of transfer of control of the products to the customer.
F-7
Since payment terms are less than a year, the Company has elected the practical expedient and does not assess whether a customer contract has a significant financing component.
A five-step approach is applied in the recognition of revenue: (1) identify the contract with a customer, (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, and (5) recognize revenue when the Company satisfies a performance obligation. Customer purchase orders plus the underlying master sales agreements are considered to be contracts with the customer for purposes of applying the five-step approach.
Returns under the Company’s general assurance warranty of products have not been material historically and warranty-related services are not considered a separate performance obligation under the customer orders.
Each distinct promise to transfer products is considered to be an identified performance obligation for which revenue is recognized upon transfer of control of the products to the customer. Although customers may place orders for products to be delivered on multiple dates that may be in different quarterly reporting periods, all of the orders are scheduled within one year from the order date. The Company has opted to not disclose the portion of revenues allocated to partially unsatisfied performance obligations, which represent products to be shipped within 12 months under open customer purchase orders, at the end of the current reporting period. The Company has also elected to record sales commissions when incurred, as the period over which the sales commission asset that would have been recognized is less than one year.
Concentration of Revenue by Customer
For the six months ended June 30, 2023 and 2022,
there was one customer who comprised greater than
Cash and Cash Equivalents
Cash consist of highly liquid instruments purchased
with an original maturity of three months or less. As of June 30, 2023 and December 31, 2022, the Company had cash of €
The Company minimizes the concentration of credit
risk associated with its cash by maintaining its cash with high-quality insured financial institutions. However, cash balances in excess
of the Spanish government insured limit (Fondo de Garantía de Depósitos (FDG)) of €
Accounts Receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable.
The Company will run credit checks on all customers that request term payment.
Inventory
Inventories are valued at their acquisition cost, production cost or net realizable value, whichever is lower. Discounts for prompt payment are included as a lower price, whether or not they appear on the invoice and assigning value to its inventories. The Company adopts the weighted average price method.
Net realizable value represents the estimated sales price less all estimated costs that will be incurred in the process of commercialization, sales and distribution.
The Company makes the appropriate valuation adjustments, recording impairment expense when the net realizable value of the inventories is less than their acquisition cost.
F-8
Property and equipment
Property and equipment is recognized and subsequently
measured at cost less accumulated depreciation and any accumulated impairment losses, if any. When components of property and equipment
have different useful lives they are accounted for separately.
| Furniture | ||
| Tools and machinery | ||
| Right-of-use assets |
Intangible assets
Acquired intangible assets are initially measured at cost. Following the initial recognition, intangible assets are measured at cost less any accumulated amortization and any impairment losses. The useful lives of intangible assets are either definite or indefinite. Intangible assets that have a finite useful life are amortized over the assessed useful economic life and are assessed for impairment when there are any indicators present that the intangible asset may be impaired. The Company reviews the amortization period and method at least annually, and any changes are treated as changes in accounting estimates and applied prospectively.
Computer application and webpage are amortized over estimated useful lives of three years and Software is amortized over estimated useful lives of five years.
Deferred Offering Costs
Deferred offering costs
represent legal, accounting and other direct costs related to the IPO, which will be completed on September 22, 2023. Upon the completion
of IPO, direct offering costs of will be reclassified to additional paid-in capital along with underwriters’ fees paid, net against
IPO proceeds received. The Company recorded €
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the agreement on the inception date.
As a lessee, the Company recognizes a lease obligation and a right-of-use asset in the statements of financial position on a present-value basis at the date when the leased asset is available for use. Each lease payment is apportioned between a finance charge and a reduction of the lease obligation. Finance charges are recognized in finance cost in the statements of income and comprehensive income. The right of-use assets are depreciated over the shorter of its estimated useful life and the lease term on a straight-line basis.
Lease obligations are initially measured at the net present value of the following lease payments:
| ● | fixed payments (including in-substance fixed payments), less any lease incentives; |
| ● | variable lease payment that are based on an index or a rate; |
| ● | amounts expected to be payable under residual value guarantees; |
| ● | the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and |
| ● | payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option. |
F-9
Lease payments are discounted using the interest rate implicit in the lease, or if this rate cannot be determined, the Company’s incremental borrowing rate. Right-of-use assets are initially measured at cost comprising the following:
| ● | the amount of the initial measurement of the lease obligation; |
| ● | any lease payments made at or before the commencement date less any lease incentives received; and |
| ● | any initial direct costs and rehabilitation costs. |
Payments associated with short-term leases and leases of low-value assets are recognized on a straight- line basis as an expense in the statements of income and comprehensive income. Short-term leases are leases with a lease term of 12 months or less.
Share capital
Ordinary shares are classified as equity, net of transaction costs directly attributable to the issue of ordinary shares.
Ordinary shares issued for consideration other than cash are based on their market value at the date the ordinary shares are issued.
Provisions
Provisions are recognized when there is a present legal or constructive obligation as a result of a past event, for which it is probable that a transfer of economic benefits will be required to settle the obligation, and where a reliable estimate can be made of the amount of the obligation. Provisions are discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability, if material. Where discounting is used, the increase in the provision due to passage of time (“accretion expense”) is recognize as an expense on the statements of income and comprehensive income.
Foreign currency transactions
The functional currency used by the Company is the euro. Consequently, operations in currencies other than the euro are considered to be denominated in foreign currency and are recorded at the exchange rates in force on the dates of the operations.
At year-end, monetary assets and liabilities denominated in foreign currency are converted by applying the exchange rate on the balance sheet date. The profits or losses revealed are charged directly to the profit and loss account for the year in which they occur.
On each balance sheet date, monetary assets and liabilities in foreign currency are converted at the rates in force on the closing date. Non-monetary items in foreign currency measured in terms of historical cost are converted at the exchange rate on the date of the transaction.
The exchange differences of the monetary items that arise both when liquidating them and when converting them at the closing exchange rate, are recognized in the results of the year, except those that are part of the investment of a business abroad, which are recognized directly in equity net of taxes until the time of its disposal.
Income per share
Basic income per share is calculated by dividing the income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding in the period. For all periods presented, the income attributable to ordinary shareholders equals the reported income attributable to owners of the Company.
Diluted income per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of ordinary shares outstanding for the calculation of diluted income per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase ordinary shares at the average market price during the period.
F-10
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding, as of June 30, 2023 and December 31, 2022.
Impairment of non-financial assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication that the carrying amount is not recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Management assesses impairment of non-financial assets such as property and equipment and intangible assets. In assessing impairment, management estimates the recoverable amount of each asset or cash generating unit (“CGU”) based on expected future cash flows. The Company has applied judgment in its assessment of the appropriateness of the determination of CGU’s. When measuring expected future cash flows, management makes assumptions about future growth of profits which relate to future events and circumstances. Actual results could vary from these estimated future cash flows. Estimation uncertainty relates to assumptions about future operating results and the application of an appropriate discount rate.
Financial instruments
Financial assets
Financial assets are classified as either financial assets at fair value through profit and loss (“FVTPL”), amortized cost, or fair value through other comprehensive income (“FVTOCI”). The Company determines the classification of its financial assets at initial recognition.
Classification and measurement
Classification determines how financial assets and financial liabilities are accounted for in financial statements and, in particular, how they are measured on an ongoing basis. IFRS 9 Financial Instruments approach for the classification of financial assets is driven by cash flow characteristics and the business model in which an asset is held. This single, principle-based approach replaces prior rule-based requirements. The model also results in a single impairment model being applied to all financial instruments.
Financial assets at FVTPL
Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of income and comprehensive income. Realized and unrealized gains and income arising from changes in the fair value of the financial asset held at FVTPL are included in the statements of income and comprehensive income in the period in which they arise. The Company has classified cash as FVTPL.
Financial assets at FVTOCI
Financial assets at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. There are no financial assets classified as FVTOCI.
Financial assets at amortized cost
Financial assets at amortized cost are initially recognized at fair value, net of transaction costs, and subsequently carried at amortized cost less any impairment. They are classified as current assets or non- current assets based on their maturity date. The Company has classified accounts receivable and amounts due from related parties at amortized cost.
Financial assets are derecognized when they mature or are sold, and substantially all the risks and rewards of ownership have been transferred.
F-11
Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or at amortized cost. The Company determines the classification of its financial liabilities at initial recognition.
Financial liabilities are classified as measured at amortized cost, net of transaction costs unless classified as FVTPL. The Company’s accounts payable and accrued liabilities, amounts due to related parties, lease liabilities and bank loans are classified as measured at amortized cost.
The Company’s bank loans were classified
as measured at amortized cost at June 30, 2023 and December 31, 2022. During the six months ended June 30, 2023 and 2022, the Company
incurred €
Fair value measurement
Fair value measurements are made using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value:
| ● | Level 1 – defined as observable inputs such as quoted prices in active markets; |
| ● | Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and |
| ● | Level 3 – defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
The fair value measurement is categorized in its entirety by reference to its lowest level of significant input. Fair value is based on estimated cash flows, discounted at interest rates for similar instruments.
The carrying amounts shown of the Company’s financial instruments including cash, accounts receivable, inventories, accounts payable and accrued liabilities approximate their fair value (Level 1) due to the short-term maturities of these instruments.
Impairment of financial assets
The Company assesses at each statements of financial position date whether there is objective evidence that a financial asset or group of financial assets is impaired.
The Company recognizes expected credit losses (“ECL”) for accounts receivable based on the simplified approach. The simplified approach to the recognition of expected losses does not require the Company to track the changes in credit risk; rather, the Company recognizes a loss allowance based on lifetime expected credit losses at each reporting date from the date of the account receivable.
The Company measures expected credit loss by considering the risk of default over the contract period and incorporates forward-looking information into its measurement. ECLs are a probability-weighted estimate of credit losses.
ECLs are measured as the difference in the present value of the contractual cash flows that are due to the Company under the contract, and the cash flows that the Company expects to receive. The Company assesses all information available, including past due status, and forward looking macro- economic factors in the measurement of the ECLs associated with its assets carried at amortized cost.
The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.
F-12
New Accounting Pronouncements
The following accounting standards and amendments have been issued by the IASB or the International Financial Reporting Interpretations Committee that are not yet effective as of the date of the Company’s consolidated financial statements. The Company intends to adopt such standards upon the mandatory effective date.
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
The amendments to IAS1 provide a more general approach to the classification of liabilities based on the contractual arrangements in place at the reporting date. These amendments are effective for reporting periods beginning on or after January 1, 2023. The Company is evaluating the impact of the above amendments on its consolidated financial statements.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of these consolidated financial statements in accordance with IFRS requires management to make estimates and judgments that affect the recognition, measurement and disclosure of amounts reported in these consolidated financial statements and accompanying notes. The reported amounts and note disclosures are determined using management’s best estimates based on assumptions that reflect the most probable set of economic conditions and planned courses of action. Actual results may differ from such estimates. These judgments, estimates and assumptions are reviewed regularly.
The following are significant management judgments, estimates and assumptions used in applying the accounting policies of the Company that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses:
Leases
The Company exercises judgment in determining the approximate lease term on a lease by lease basis. The Company considers all facts and circumstances that may create an economic incentive to exercise renewal options and also evaluated the economic incentive related to continuation of existing leaseholds. The Company is also required to estimate specific criteria in order to estimate the carrying amount of right-of-use assets and lease liabilities including the incremental borrowing rate and effective interest rate.
Valuation of accounts receivable
Management monitors the financial stability of its customers and the environment in which they operate to make estimates regarding the likelihood that the individual trade balances will be paid. Credit risks for outstanding customer receivables are regularly assessed and allowances are recorded for estimated losses, if required.
Valuation of inventory
Management makes estimates of future customer demand for products when establishing appropriate provisions for inventory obsolescence. In making these estimates, management considers the aged of inventory and profitability of recent sales.
Recoverability of income taxes
The measurement and assessment of income tax assets and liabilities requires management to make judgments in the interpretation and application of the relevant tax laws and estimates of the Company’s abilities to utilize losses carried forward to offset taxes payable on future taxable income. The actual amount of income taxes only becomes final upon filing and acceptance of the tax return by the relevant tax authorities, which occurs subsequent to the issuance of the financial statements.
F-13
Useful life of property and equipment
Changes in the intended use of property and equipment as well as changes in technology or economic conditions may cause the estimated useful life of these assets to change. The change in useful lives could impact the depreciation expense and carrying value of property and equipment.
Useful life of intangible assets
Changes in the intended use of intangible assets with determinable useful lives as well as changes in technology or economic conditions may cause the estimated useful life of these assets to change. The change in useful lives could impact the amortization expense and carrying value of intangible assets.
NOTE 4 – ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
| June 30, 2023 | December 31, 2022 | |||||||
| Customers by sales provision of services | € | € | ||||||
| VAT receivable | ||||||||
| Others | ||||||||
| € | € | |||||||
| Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| € | € | |||||||
As of June 30, 2023 and December 31, 2022, the
allowance for doubtful accounts of €
NOTE 5 – INVENTORIES
As of June 30, 2023 and December 31, 2022, the
Company had finished goods of €
The Company outsourced the management of inventories to a third party with all the inventories located in warehouse owned by the third parties. The Company pays a monthly fee to the warehouse company for insurance coverage of the inventories, as stated in the agreement between both parties.
NOTE 6 – PREPAID EXPENSE
| June 30, 2023 | December 31, 2022 | |||||||
| Advancement to suppliers for inventory | € | € | ||||||
| Advancement for PP&E under construction | ||||||||
| Conference | ||||||||
| Security deposits and others | ||||||||
| € | € | |||||||
As of June 30, 2023 and December 31, 2022, the
Company has advancement to suppliers for purchase of inventory of €
F-14
NOTE 7 – PROPERTY AND EQUIPMENT
| June 30, 2023 | December 31, 2022 | |||||||
| Furniture | € | € | ||||||
| Laboratory Photovoltaic Installation | ||||||||
| Tools and Machinery | ||||||||
| Computer | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| € | € | |||||||
During the six months ended June 30, 2023 and
2022, the Company acquired property and equipment of €
NOTE 8 – INTANGIBLE ASSETS
| June 30, 2023 | December 31, 2022 | |||||||
| Software development | € | € | ||||||
| Software | ||||||||
| Computer application | ||||||||
| Web page | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| € | ||||||||
As of June 30, 2023 and December 31, 2022, the
Company has intangible assets of €
During the six months ended June 30, 2023 and
2022, the Company recorded amortization expense of €
F-15
NOTE 9 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
| June 30, 2023 | December 31, 2022 | |||||||
| Trade payable | € | € | ||||||
| VAT payable | ||||||||
| Payroll taxes payable | ||||||||
| Customer deposits | ||||||||
| € | € | |||||||
NOTE 10 – RELATED PARTY TRANSACTIONS
Due from related parties:
| Ultimate | Senior | Other group | ||||||||||||||
| partner | partner | companies | Total | |||||||||||||
| Long-term investment | € | € | € | € | ||||||||||||
| Short-term investment | ||||||||||||||||
| Trade receivables | ||||||||||||||||
| Total | € | € | € | € | ||||||||||||
| Ultimate | Senior | Other group | ||||||||||||||
| partner | partner | companies | Total | |||||||||||||
| Long-term loan | € | € | ( | ) | € | € | ( | ) | ||||||||
| Short-term loan | ( | ) | ( | ) | ||||||||||||
| Credits pending collection | ( | ) | ( | ) | ||||||||||||
| Total | € | € | ( | ) | € | € | ( | ) | ||||||||
All the amount due to and from related parties are unsecured, non-interest
bearing and due on demand, except for the loan agreement from Umbrella Solar of €
Due from related parties:
| Ultimate | Senior | Other group | ||||||||||||||
| partner | partner | companies | Total | |||||||||||||
| Credits pending collection | € | € | € | € | ||||||||||||
| Long-term investment | ||||||||||||||||
| Trade receivable | ||||||||||||||||
| Total | € | € | € | € | ||||||||||||
F-16
Due to related parties:
| Ultimate | Senior | Other group | ||||||||||||||
| partner | partner | companies | Total | |||||||||||||
| Credits pending collection | € | € | € | ( | ) | € | ( | ) | ||||||||
| Trade payable to related party | ( | ) | ( | ) | ||||||||||||
| Total | € | € | ( | ) | € | ( | ) | € | ( | ) | ||||||
Amount due to and from related parties are unsecured, non-interest bearing and due on demand.
Six Months Ended June 30, 2023
| Senior | Other group | |||||||||||
| partner | companies | Total | ||||||||||
| Sales | € | € | € | |||||||||
| Services received | ||||||||||||
| € | € | € | ||||||||||
Six Months Ended June 30, 2022
| Senior | Other group | |||||||||||
| partner | companies | Total | ||||||||||
| Sales | € | € | € | |||||||||
| Services received | ||||||||||||
| Purchases | ||||||||||||
| € | € | € | ||||||||||
Our related party transactions during the fiscal year ended December 31, 2021, include sales of products or services made to or purchases of products or services from affiliated group companies that are under common control and to associates of such group companies. These transactions include income accrued from the commercial activities of our company. The purchases relate to merchandise that we sell in its normal course of commercial operations.
Umbrella Solar Investment, as the holding company
of the group, assumes all structural costs such as those related to the human resources, licenses, legal, tax, labor, marketing, and other
generic structural costs. A margin of
During the six months ended June 30, 2023 and
2022, the Company incurred management fees to Umbrella Solar Investment, S.A, of €
No compensation has been paid to the executives under Crocodile Investment SLU. The company expects to continue with the same allocation structure in the future.
F-17
NOTE 11 – BANK LOANS
| June 30, 2023 | December 31, 2022 | |||||||
| Bank loans | € | € | ||||||
| Lines of credit | ||||||||
| less: current portion | ( | ) | ( | ) | ||||
| € | € | |||||||
| Nominal | June 30, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Bank Loans | Currency | interest rate | Year of maturity | Face Value | Carrying Amount | Face Value | Carrying Amount | ||||||||||||||||||
| Bankia SA | EUR | % | |||||||||||||||||||||||
| Targobank SA | EUR | % | |||||||||||||||||||||||
| Banco de Sabadell SA | EUR | % | |||||||||||||||||||||||
| Liberbank | EUR | % | |||||||||||||||||||||||
| € | € | € | € | ||||||||||||||||||||||
During the six months ended June 30, 2023 and
2022, the Company incurred bank loan interest expense of €
The Company’s obligations are secured by substantially all of the assets of the Company.
| Year ended December 31, | ||||
| 2023 (excluding the six months ended June 30, 2023) | € | |||
| 2024 | ||||
| 2025 | ||||
| Thereafter | ||||
| Total | € | |||
In addition,
As of June 30, 2023
| June 30, 2023 | ||||||||||||
| Line of credit | Credit Limit | Nominal interest rate | Maturity | Carrying Value | ||||||||
| Caixabank | € | € | ||||||||||
| Sabadell | ||||||||||||
| BBVA | ||||||||||||
| BBVA | ||||||||||||
| Santander | ||||||||||||
| Abanca ICO | ||||||||||||
| Abanca | ||||||||||||
| Bankinter ICO | ||||||||||||
| Bankinter | ||||||||||||
| € | € | |||||||||||
F-18
As of December 31, 2022
| December 31, 2022 | ||||||||||||
| Line of credit | Credit Limit | Nominal interest rate | Maturity | Carrying Value | ||||||||
| Caixabank | € | € | ||||||||||
| Sabadell | ||||||||||||
| BBVA | ||||||||||||
| BBVA | ||||||||||||
| Santander | ||||||||||||
| Abanca ICO | ||||||||||||
| Abanca | ||||||||||||
| Bankinter ICO | ||||||||||||
| Bankinter | ||||||||||||
| € | € | |||||||||||
The Company has €
NOTE 12 – SHARE CAPITAL
Authorized
The Company has authorized
Issuances
During December 2022, we issued
The Company has reflected this issuance of ordinary shares for all periods presented due to their nominal value, relative to the planned Initial Public Offering. The Company accounted for the proceeds as share capital in the year ended December 31, 2022. Earnings per share and ordinary shares outstanding have been retroactively reflected to show this issuance from the earliest period reported.
Stock Split
In February 2023, the Company approved a forward
stock split of the issued and outstanding ordinary shares on a 20-for-1 basis. We increased our issued and outstanding share capital from
NOTE 13 – RESERVE
As of June 30, 2023 and December 31, 2022, reserve
was €
Legal reserve
In accordance with the capital company law, companies
must allocate amount equal to
F-19
Other reserve
The Company maintains unrestricted reserve for
undistributed profits from previous years. As of June 30, 2023 and December 31, 2022, the other reserves were €
NOTE 14 – LEASES
| Discount | June 30, | December 31, | ||||||||||
| Rate | Maturity | 2023 | 2022 | |||||||||
| Current | € | € | ||||||||||
| Non-current | ||||||||||||
| € | € | |||||||||||
| Balance - December 31, 2021 | € | |||
| Lease liability additions | ||||
| Lease liability termination | ( | ) | ||
| Repayment of Lease liability | ( | ) | ||
| Interest expense on lease liabilities | ||||
| Balance - December 31, 2022 | € | |||
| Repayment of Lease liability | ( | ) | ||
| Interest expense on lease liabilities | ||||
| Balance - June 30, 2023 | € |
On September 8, 2020, the Company entered into
a vehicle lease agreement under a four-year term and monthly lease payment of €
On January 1, 2021, the Company entered into an
office lease agreement under a five-year term and monthly lease payment of €
On June 1, 2022, the Company entered into an office
lease agreement under a two-year term extensible for
On September 26, 2022, the Company entered into
a vehicle lease agreement under a three-year term and monthly lease payment of €
On November 15, 2022, the Company entered into
a vehicle lease agreement under a three-year term and monthly lease payment of €
F-20
| 2023 (excluding the six months ended June 30, 2023) | € | |||
| 2024 | ||||
| 2025 | ||||
| Total lease payments | ||||
| Less: financing cost | ( | ) | ||
| Lease liabilities | € |
| Balance - December 31, 2021 | € | |||
| Additions | ||||
| Termination | ( | ) | ||
| Depreciation | ( | ) | ||
| Balance - December 31, 2022 | € | |||
| Depreciation | ( | ) | ||
| Balance - June 30, 2023 | € |
NOTE 15 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
| Financial assets at fair value | June 30, 2023 | December 31, 2022 | ||||||
| Cash | € | € | ||||||
| Financial assets at amortized cost | ||||||||
| Accounts receivable and other receivables | ||||||||
| Amount due from related parties | ||||||||
| Financial liabilities at amortized cost | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Amount due to related parties | ( | ) | ( | ) | ||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Bank loans | ( | ) | ( | ) | ||||
| € | ( | ) | € | ( | ) | |||
Liquidity risk
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due in the normal course of business. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price. Difficulty accessing capital markets could impair the Company’s capacity to grow, execute its business model and generate financial returns. The Company manages its liquidity risk by monitoring its operating requirements to ensure financial resources are available, actively monitoring market conditions and by diversifying its sources of funding and maintaining a diversified maturity profile of its debt obligations.
F-21
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company’s main credit risk relates to its cash and accounts receivable. The Company’s credit risk is reduced by a broad customer base and a review of customer credit profiles.
The Company’s maximum exposure to credit risk corresponds to the carrying amount for all cash and accounts receivable. Cash is held with prominent financial institutions. Accounts receivable are held with vendors in which the Company has a historically strong relationship with or related to VAT receivable.
The Company mitigates credit risk associated with its trade receivables through established credit approvals, limits and a regular monitoring process. The Company generally considers the credit quality of its financial assets that are neither past due nor impaired to be solid. Credit risk is further mitigated due to the large number of customers and their dispersion across geographic areas.
As of June 30, 2023 and December 31, 2022, there
was one customer and one customer with amount outstanding that exceed
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is not exposed to significant currency risk.
Interest risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its lines of credit due to fluctuations in interest rates. The Company’s bank loans and leases have fixed rates of interest resulting in limited interest rate fair value risk for the Company. The Company manages interest rate risk by seeking financing terms in individual arrangements that are most advantageous taking into account all relevant factors, including credit margin, term and basis. The risk management objective is to minimize the potential for changes in interest rates to cause adverse changes in cash flows to the Company.
Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is not exposed to other price risk.
Capital management
The Company’s capital consists of share capital and reserve. The Company’s capital management is designed to ensure that it has sufficient financial flexibility both in the short and long-term to support its financial obligations and the future development of the business.
F-22
The Company manages its capital with the following objectives:
| (i) | Ensuring sufficient liquidity is available to support its financial obligations and to execute its operating strategic plans; |
| (ii) | Maintaining financial capacity and flexibility through access to capital to support future development of the business; |
| (iii) | Minimizing its cost of capital and considering current and future industry, market and economic risks and conditions; and |
| (iv) | Utilizing short-term funding sources to manage its working capital requirements and long- term funding sources to match the long-term nature of the property, plant and equipment of the business. |
There were no changes to the Company’s approach to capital management during the six months ended June 30, 2023 and year ended December 31, 2022. The Company is not subject to externally imposed capital requirements.
NOTE 16 – DEFERRED OFFERING COSTS
| June 30, 2023 | December 31, 2022 | |||||||
| Independent Professional Services | € | € | ||||||
| Legal and Tax Advice | ||||||||
| Notary, Registry and Others | ||||||||
| Video, Photography, Design and Layout | ||||||||
| € | € | |||||||
NOTE 17 – REVENUE
| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Spain | € | € | ||||||
| Europe | ||||||||
| Rest of the world | ||||||||
| € | € | |||||||
During the six months ended June 30, 2023 and
2022, the Company recognized revenue of €
NOTE 18 – COST OF REVENUE
| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Purchase of finished goods | € | € | ||||||
| Purchase of raw materials | ||||||||
| Outsourcing service | ||||||||
| € | € | |||||||
F-23
During the six months ended June 30, 2023 and
2022, the Company incurred cost of sales of €
NOTE 19 – SELLING AND ADMINISTRATIVE EXPENSES
| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Professional fees | € | € | ||||||
| Shipping and handling expenses | ||||||||
| Warehouse handling | ||||||||
| Miscellaneous operating expenses | ||||||||
| Marketing and advertising | ||||||||
| Leases and royalties | ||||||||
| Insurance premiums | ||||||||
| Repair and conservation | ||||||||
| Supplies | ||||||||
| Amortization of property and equipment | ||||||||
| Amortization of right-of-use assets | ||||||||
| € | € | |||||||
During the six months ended June 30, 2023 and
2022, the Company incurred selling and administrative expenses of €
NOTE 20 – SUPPLEMENTAL CASH FLOW INFORMATION
Set out below are non-cash investing and financing activities during the six months ended June 30, 2023 and 2022:
| Six Months Ended | Six Months Ended | |||||||
| June 30, | June 30, | |||||||
| 2023 | 2022 | |||||||
| Reallocation of opening deficit to reserve | € | ( | ) | € | ( | ) | ||
During the six months ended June 30, 2023 and
2022, the Company paid interest of €
NOTE 21 – SUBSEQUENT EVENTS
Between the end of six months ended June 30, 2023 and the date of preparation of these consolidated financial statements, the Company has gone through a main subsequent event, which is its successful debut on the Nasdaq stock exchange on September 22, 2023
The Company announced initial public offering
of
F-24
Exhibit 99.2
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
IN CONNECTION WITH THE INTERIM CONSOLIDATED
FINANCIAL STATEMENTS FOR THE
SIX MONTHS ENDED JUNE 30, 2023
In this report, as used herein, and unless the context suggests otherwise, the terms “TURB,” “Company,” “we,” “us” or “ours” refer to the combined business of Turbo Energy, S.A., its subsidiaries and other consolidated entities. References to “dollar” and “$” are to U.S. dollars, the lawful currency of the United States. References to “EUR euros”, “euros” and “€” are to the legal currency of the European Union. References to “SEC” are to the Securities and Exchange Commission.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited consolidated financial statements and the related notes included elsewhere in this Report on Form 6-K and with the discussion and analysis of our financial condition and results of operations contained in our Registration Statement on Form F-1 filed with the Securities and Exchange Commission that declared effective on September 21, 2023 (the “F-1”). This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those identified elsewhere in this report on Form 6-K, and those listed in the F-1 under “Risk Factors” or in other parts of the F-1.
Overview
We design, develop, and distribute equipment for the generation, management, and storage of photovoltaic (PV) energy. Our energy storage products are managed, from the cloud and through the inverter of the installation, by an advanced software system which is optimized by artificial intelligence (“AI”). The key advantage is that our products, compared to conventional battery storage systems, reduce electricity bills and protect the installation from power outages.
We recently launched our flagship product, the Sunbox, an all-in-one device that integrates most of the equipment for a domestic photovoltaic installation. The Sunbox is powered by AI and features a software system that monitors the generation, use, and management of photovoltaic energy through the analysis of large amounts of data related to energy generation, consumption, market prices, and weather forecasts. This AI system optimizes battery usage, reducing electricity bills and providing peak shaving and uninterruptible power supply functions.
Currently, we primarily sell inverters, batteries, and photovoltaic modules to installers and other distributors for residential consumers located in Spain. With the experience gained from our subsidiary Turbo Energy Solutions, we possess the expertise and international perspective to expand the product portfolio towards industrial and commercial scales and purposes (“C&I”), as well as expand the internationalization process that we already started.
Turbo Energy is part of the Umbrella Solar Investment Group, whose main shareholder is Crocodile Investment, S.L.U, (hereinafter, the ultimate partner), with a registered office in Valencia. The majority shareholder of Turbo Energy, S.A is Umbrella Solar Investment, S.A (hereinafter, the majority shareholder), which is part of the Umbrella Solar Investment Group.
Our total revenues decreased by € 7,122,126, or 50%, to €7,211,916 (approximately $7,875,412) for the six months ended June 30, 2023, compared to €14,334,042 for the six months ended June 30, 2022. Our net income decreased by € 1,392,346, or 200% to € (697,313) (approximately $761,466) for the six months ended June 30, 2023, compared to €695,033 for the six months ended June 30, 2022. The principal activities of the Company for the six months ended June 30, 2023 and 2022 were acquisition, distribution and sale of electrical and electronic material for the development of renewable energy projects, such as solar panels, inverters, chargers, regulators, batteries and structures, among others.
Our total revenues increased by €13,994,055, or 82%, to €31,148,676 (approximately $33,321,219) for the fiscal year ended December 31, 2022, compared to €17,154,621 for the fiscal year ended December 31, 2021. Our net income increased by €761,356, or 285% to €1,028,578 (approximately $1,100,321) for the year ended December 31, 2022, compared to €267,222 for the year ended December 31, 2021. The principal activities of the Company for the years ended December 31, 2022 and 2021 were acquisition, distribution and sale of electrical and electronic material for the development of renewable energy projects, such as solar panels, inverters, chargers, regulators, batteries and structures, among others. The Company designs, develops, and distributes equipment for the generation, management, and storage of photovoltaic energy.
Results of Operations
The following table sets forth a summary of our unaudited interim condensed consolidated results of operations and the amounts as a percentage of total revenues for the periods indicated. This information should be read together with our unaudited interim condensed consolidated financial statements and related notes included elsewhere in this prospectus. Our historical results presented below are not necessarily indicative of the results that may be expected for any future period.
Comparison of six months ended June 30, 2023 and 2022
| Six Months Ended June 30 | ||||||||||||||||||||
| 2023 | 2022 | Increase (Decrease) | ||||||||||||||||||
| € | $ | € | € | % | ||||||||||||||||
| Revenues | ||||||||||||||||||||
| Revenue | 7,019,127 | 7,664,887 | 13,789,074 | (6,769,947 | ) | -49 | % | |||||||||||||
| Revenue - related parties | 184,362 | 201,323 | 544,786 | (360,424 | ) | -66 | % | |||||||||||||
| Other operating income | 8,427 | 9,202 | 182 | 8,245 | 4524 | % | ||||||||||||||
| Total Revenue | 7,211,916 | 7,875,412 | 14,334,042 | (7,122,126 | ) | -50 | % | |||||||||||||
| Cost and expenses | ||||||||||||||||||||
| Cost of revenue | 6,013,713 | 6,566,975 | 11,973,743 | (5,960,030 | ) | -50 | % | |||||||||||||
| Cost of revenues - related parties | - | - | 30,696 | (30,696 | ) | -100 | % | |||||||||||||
| Selling and administrative | 728,329 | 795,335 | 760,174 | (31,845 | ) | -4 | % | |||||||||||||
| Selling and administrative – related parties | 508,590 | 555,380 | 142,433 | 366,157 | 257 | % | ||||||||||||||
| Salaries and benefits | 447,282 | 488,432 | 408,020 | 39,262 | 10 | % | ||||||||||||||
| Bad debt expense (recovery) | 4,534 | 4,951 | (10,859 | ) | 15,393 | -142 | % | |||||||||||||
| Total Cost and Expenses | 7,702,448 | 8,411,073 | 13,304,207 | (5,601,759 | ) | -42 | % | |||||||||||||
| Income (loss) from operations | (490,532 | ) | (535,661 | ) | 1,029,835 | (1,520,367 | ) | -148 | % | |||||||||||
| Other expenses (income) | ||||||||||||||||||||
| Interest expense | (159,197 | ) | (173,843 | ) | (132,861 | ) | (26.336 | ) | 20 | % | ||||||||||
| Foreign exchange gain (loss) | (47,584 | ) | (51,962 | ) | 31,986 | (79,570 | ) | -249 | % | |||||||||||
| Total Other Income (Expense) | (206,781 | ) | (225,805 | ) | (100,875 | ) | (105,906 | ) | 105 | % | ||||||||||
| Net Income (Loss) Before Income Tax | (697,313 | ) | (761,466 | ) | 928,960 | (1,626,2713 | ) | -175 | % | |||||||||||
| Income tax expense - current | - | - | (233,927 | ) | 233.927 | -100 | % | |||||||||||||
| Income tax expense - deferred | - | - | - | - | - | |||||||||||||||
| Net Loss (Income) | (697,313 | ) | (761,466 | ) | 695,033 | (1,392,346 | ) | -200 | % | |||||||||||
Revenue
The principal activities of the Company for the six months ended June 30, 2023 and 2022 were acquisition, distribution and sale of electrical and electronic material for the development of renewable energy projects, such as solar panels, inverters, chargers, regulators, batteries and structures, among others. The Company designs, develops, and distributes equipment for the generation, management, and storage of photovoltaic energy. Revenue for the six months ended June 30, 2023 and 2022 was €7,211,916 (approximately $7,875,412) and €14,334,042, respectively, representing an decrease of 50%. The decrease was due to a variety of external factors, high interest rates, significant energy price decreases and subsidy reductions in some markets have resulted in weak demand for the period, which combined with high inventory levels in the distribution channels has contributed to a significant reduction in revenue volumes, especially in Europe, which is the main market of the Company, and affected Turbo Energy equally.
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Revenue from related parties decrease by € 360,424, or 66%, to €184,362 (approximately $201,323) for the six months ended June 30, 2023 from €544,786 for the six months ended June 30, 2022. The revenue from related parties is generally not significant, but the decrease is in line with the decrease in general revenue. Revenue from related parties accounted for 3% of our total revenue for the six months ended June 30, 2023, as compared to 4% for the six months ended June 30, 2022.
For the six months ended June 30, 2023 and 2022, we had other operating income of €8,427 (approximately $9,202) and €182, respectively.
Cost of revenue
Our cost of revenue includes purchase of finished goods, purchase of raw materials, outsourcing services and inventory adjustment. Our cost of revenue decreased by € 5,960,030, or 50%, to €6,013,713 (approximately $6,555,975) for the six months ended June 30, 2023 from €11,973,743 for the six months ended June 30, 2022. Such decreased was in line with our decreased revenue.
Selling and administrative expenses Our selling and administrative expenses consist primarily of professional fees, shipping and handling, warehouse handling, marketing and advertising, leases and royalties, and amortization of right-of-use assets. Our selling and administrative expenses decreased by € 31,845, or 4% to €728,329 (approximately $795,335) for the six months ended June 30, 2023, from €760,174 for the six months ended June 30, 2022. The entity has been increasing its administrative expenses, but they decrease slightly with those of June 2022 because last year there were already IPO-related expenses that were not activated.
Salaries and benefits Our salaries and benefits increased by € 39,262 or 10% to €447,282 (approximately $488,432) for the six months ended June 30, 2023 from €408,020 for the six months ended June 30, 2022. Such an increase was primarily due to the increase in headcount in order to carry out international expansion.
Bad debt expense Our bad debt expense increased by €15,393, or 142% to €4,534 (approximately $4,951) for the six months ended June 30, 2023, from €(10,859) for the six months ended June 30, 2022. The increase was primarily due to the default of a specific customer.
Interest expense Our interest expenses increased by € 26,336, or 20% to €(159,197) (approximately $173,843) for the six months ended June 30, 2023, from €(132,861) for the six months ended June 30, 2022. The increase is related to the increase in interest rates that has been experienced over the course of 2023.
Foreign exchange net income Our foreign exchange net income decreased by €79,570, or 249% to € (47,584) (approximately $51,962) for the six months ended June 30, 2023 from €31,986 for the six months ended June 30, 2022. The decrease is due to the fluctuation of the Euro dollar throughout the year.
Income tax expense.
We recorded income tax expenses of €0 for the six months ended June 30, 2023, as compared to €(233,927) for the six months ended June 30, 2022, an decreased of €233,927 or 100%. The decreased in the income tax expense is due to the negative in net income before income tax.
Net Income (Loss)
Net income (loss) for the six months ended June 30, 2023 and 2022 was €(697,313) (approximately $761,466) and €928,960, respectively. Such decreased was in line with our decreased revenue.
Liquidity and Capital Resources
As of June 30, 2023, we had cash and cash equivalents of €498,099 (approximately $543,924). To date, we have financed our operations primarily through capital contributions from our parent company and the results generated from profitable years.
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We believe that our current levels of cash and cash flows from operations, combined with the net proceeds from the IPO offering of September 22nd 2023, will be sufficient to meet our anticipated cash needs for our operations and expansion plans for at least the next 12 months. We may, however, in the future require additional cash resources due to changing business conditions, implementation of our strategy to expand our business, or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.
The following table summarizes the key cash flow components from our unaudited interim condensed consolidated statements of cash flows for the periods indicated.
| Six Months Ended June 30, | ||||||||||||||||||||
| 2023 | 2022 | Changes | ||||||||||||||||||
| € | $ | € | € | % | ||||||||||||||||
| Cash Flows provided by (used in) operating activities | 949,935 | 1,037,328 | (2,675,209 | ) | 3,625,143 | -136 | % | |||||||||||||
| Cash Flows used in investing activities | (237,166 | ) | (258,985 | ) | (33,201 | ) | (203,965 | ) | 614 | % | ||||||||||
| Cash Flows provided by financing activities | (717,255 | ) | (783,242 | ) | 2,516,767 | (3,234,022 | ) | -128 | % | |||||||||||
| Net change in cash during period | (4,486 | ) | (4,899 | ) | (191,643 | ) | 187,157 | -98 | % | |||||||||||
Operating Activities
Net cash used in operating activities was €949,935 (approximately $1,037,330) for the six months ended June 30, 2023, as compared to net cash provided by operating activities of €(2,675,209) for the six months ended June 30, 2022. For the six months ended June 30, 2023, net cash used in operating activities related to net income before income tax of €(697,313) (approximately $761,464), increased by bad debt expense of €4,534 (approximately $4,949), depreciation of property and equipment of €10,051 (approximately $10,977), amortization of intangible assets of €25,141 (approximately $27,455), amortization of right-of-use assets of €27,957 (approximately $30,529), accretion of lease liabilities of €874 (approximately $954) and offset by net change in non-cash working capital items of €1,578,691 (approximately $1,723,933). For the six months ended June 30, 2022, net cash used in operating activities was attributed to net income before income tax of €928,960, increased by bad debt expense of €(10,859), depreciation of property and equipment of €1,321, amortization of intangible assets of €429, amortization of right-of-use assets of €7,944, accretion of lease liabilities of €510 and offset by net change in non-cash working capital items of €3,603,514.
Investing Activities
Net cash used in investing activities was €(237,166) (approximately $758,987) for the six months ended June 30, 2023, as compared to €(33,201) for the six months ended June 30, 2022.
Financing Activities
Net cash used in the financing activities was €(717,255) (approximately $783,243) for the six months ended June 30, 2023, as compared to net cash provided by financing activities of €2,516,767 for the six months ended June 30, 2022.
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Quantitative and Qualitative Disclosures about Market Risk
Foreign Currency Exchange Risk
Our company is exposed to foreign currency risk primarily through service income or expenses that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily US$.
Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its lines of credit due to fluctuations in interest rates. The Company’s bank loans and leases have fixed rates of interest resulting in limited interest rate fair value risk for the Company. The Company manages interest rate risk by seeking financing terms in individual arrangements that are most advantageous taking into account all relevant factors, including credit margin, term and basis. The risk management objective is to minimize the potential for changes in interest rates to cause adverse changes in cash flows to the Company.
Inflation
We do not believe the impact of inflation on our Company is material. Our operations are in Spain and Spain’s inflation rates have been relatively stable in the last three years: 5.7% for 2022, 3.1% for 2021, and (0.3%) for 2020.
Recent inflationary pressures have not had a significant impact on our operations. While inflation is recognized as a potential risk, the company does not believe that the impact of inflation on their operations is material. It is possible, however, that future inflationary pressures could have a greater impact on our operations, and we will monitor this risk closely.
Supply chain
A possible geopolitical conflict with China, significant price increases or shortages of equipment and components may represent potential market risks.
Critical Accounting Estimates
The preparation of our financial information requires management to make estimates, judgments and assumptions concerning the future. Estimates, judgments and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results.
Statement of compliance
The consolidated financial statements of Turbo Energy, S.A. have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS. The consolidated financial statements comply with IFRS as issued by the International Accounting Standards Board (“IASB”).
These consolidated financial statements were approved by the board of directors of the Company on December 20, 2023.
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Basis of preparation
The consolidated financial statements of the Company were prepared on a historical cost basis except where certain financial instruments that are required to be measured at fair value. These consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
The consolidated financial statements are presented in Euro, which is the Company’s functional currency. Transactions in currencies other than the functional currency are recorded in accordance with the policies stated under Foreign Currency Transaction below.
Reclassification
Certain amounts from prior period have been reclassified to conform to the current period presentation. These reclassifications had no impact on reported operating and net loss.
Revenue recognition
The Company design, develop, and distribute equipment for the generation, management, and storage of photovoltaic energy. Our energy storage products are managed, from the cloud and through the inverter of the installation, by an advanced software system which is optimized by artificial intelligence (“AI”). The key advantage is that our products, comparing to conventional battery storage systems, reduce electricity bill and protect the installation from power outages.
The Company’s revenue is primarily generated from sales of the inverters, batteries, and photovoltaic modules to installers and other distributors for residential consumers under individual customer purchase orders, some of which have underlying master sales agreements that specify terms governing the product sales.
The Company recognizes such revenue at the point in time when control of the products is transferred to the customer at the estimated net consideration for which collection is probable, taking into account the customer’s rights to unit rebates, and rights to return unsold product.
Transfer of control occurs either when products are shipped to or received by the distributor or direct customer, based on the terms of the specific agreement with the customer, if the Company has a present right to payment and transfer of legal title and the risks and rewards of ownership to the customer has occurred. For most of the Company’s product sales, transfer of control occurs upon shipment to the distributor or direct customer. In assessing whether collection of consideration from a customer is probable, the Company considers the customer’s ability and intention to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 to 60 days from the invoice date, which occurs on the date of transfer of control of the products to the customer.
Since payment terms are less than a year, the Company has elected the practical expedient and does not assess whether a customer contract has a significant financing component.
A five-step approach is applied in the recognition of revenue: (1) identify the contract with a customer, (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, and (5) recognize revenue when the Company satisfies a performance obligation. Customer purchase orders plus the underlying master sales agreements are considered to be contracts with the customer for purposes of applying the five-step approach.
Returns under the Company’s general assurance warranty of products have not been material historically and warranty-related services are not considered a separate performance obligation under the customer orders.
Each distinct promise to transfer products is considered to be an identified performance obligation for which revenue is recognized upon transfer of control of the products to the customer. Although customers may place orders for products to be delivered on multiple dates that may be in different quarterly reporting periods, all of the orders are scheduled within one year from the order date. The Company has opted to not disclose the portion of revenues allocated to partially unsatisfied performance obligations, which represent products to be shipped within 12 months under open customer purchase orders, at the end of the current reporting period. The Company has also elected to record sales commissions when incurred, as the period over which the sales commission asset that would have been recognized is less than one year.
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Foreign currency transactions
The functional currency used by the Company is the euro. Consequently, operations in currencies other than the euro are considered to be denominated in foreign currency and are recorded at the exchange rates in force on the dates of the operations.
On each balance sheet date, monetary assets and liabilities in foreign currency are converted at the rates in force on the closing date. Non-monetary items in foreign currency measured in terms of historical cost are converted at the exchange rate on the date of the transaction.
The exchange differences of the monetary items that arise both when liquidating them and when converting them at the closing exchange rate, are recognized in the results of the year, except those that are part of the investment of a business abroad, which are recognized directly in equity net of taxes until the time of its disposal.
Leases
The Company exercises judgment in determining the approximate lease term on a lease by lease basis. The Company considers all facts and circumstances that may create an economic incentive to exercise renewal options and also evaluated the economic incentive related to continuation of existing leaseholds. The Company is also required to estimate specific criteria in order to estimate the carrying amount of right-of-use assets and lease liabilities including the incremental borrowing rate and effective interest rate.
Valuation of accounts receivable
Management monitors the financial stability of its customers and the environment in which they operate to make estimates regarding the likelihood that the individual trade balances will be paid. Credit risks for outstanding customer receivables are regularly assessed and allowances are recorded for estimated losses, if required.
Valuation of inventory
Management makes estimates of future customer demand for products when establishing appropriate provisions for inventory obsolescence. In making these estimates, management considers the shelf-life of inventory and profitability of recent sales.
Recoverability of income taxes
The measurement and assessment of income tax assets and liabilities requires management to make judgments in the interpretation and application of the relevant tax laws and estimates of the Company’s abilities to utilize losses carried forward to offset taxes payable on future taxable income. The actual amount of income taxes only becomes final upon filing and acceptance of the tax return by the relevant tax authorities, which occurs subsequent to the issuance of the financial statements.
Useful life of property and equipment
Changes in the intended use of property and equipment as well as changes in technology or economic conditions may cause the estimated useful life of these assets to change. The change in useful lives could impact the depreciation expense and carrying value of property and equipment.
We believe that the following accounting policies reflect the most critical estimates and assumptions and are significant to the consolidated financial statements.
We do not consider there to be any significant judgments in the preparation of the consolidated financial statements.
Intangible assets
Acquired intangible assets are initially measured at cost. Following the initial recognition, intangible assets are measured at cost less any accumulated amortization and any impairment losses. The useful lives of intangible assets are either definite or indefinite. Intangible assets that have a finite useful life are amortized over the assessed useful economic life and are assessed for impairment when there are any indicators present that the intangible asset may be impaired. The Company reviews the amortization period and method at least annually, and any changes are treated as changes in accounting estimates and applied prospectively.
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Share capital
Ordinary shares are classified as equity, net of transaction costs directly attributable to the issue of ordinary shares.
Ordinary shares issued for consideration other than cash are based on their market value at the date the ordinary shares are issued.
Provisions
Provisions are recognized when there is a present legal or constructive obligation as a result of a past event, for which it is probable that a transfer of economic benefits will be required to settle the obligation, and where a reliable estimate can be made of the amount of the obligation. Provisions are discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability, if material. Where discounting is used, the increase in the provision due to passage of time (“accretion expense”) is recognize as an expense on the statements of income and comprehensive income.
Income taxes
Income tax expense comprises current and deferred tax. Deferred tax is recognized in the statements of income and comprehensive income except to the extent that they relate to items recognized directly in equity or in other comprehensive income or loss.
Current income tax is the expected tax payable or receivable in respect of the taxable income or loss for the period, using income tax rates enacted or substantively enacted at the reporting date, and any adjustments to tax payable in respect of previous periods.
Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their related tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business acquisition or affects tax or accounting profit. The deferred tax assets and liabilities have been measured using substantively enacted tax rates that will be in effect when the amounts are expected to settle. Deferred tax assets are only recognized to the extent that it is probable that they will be able to be utilized against future taxable income. The assessment of the probability of future taxable income in which deferred tax assets can be utilized is based on the Company’s latest approved forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be used without a time limit, that deferred tax asset is usually recognized in full. The recognition of deferred tax assets that are subject to economic limits or uncertainties are assessed individually by management based on the specific facts and circumstances.
Deferred tax assets and liabilities are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognized as a component of income or expense in the statements of income and comprehensive income, except where they relate to items that are recognized in other comprehensive income or loss or directly in equity.
Impairment of non-financial assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication that the carrying amount is not recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Management assesses impairment of non-financial assets such as property and equipment and intangible assets. In assessing impairment, management estimates the recoverable amount of each asset or cash generating unit (“CGU”) based on expected future cash flows. The Company has applied judgment in its assessment of the appropriateness of the determination of CGU’s. When measuring expected future cash flows, management makes assumptions about future growth of profits which relate to future events and circumstances. Actual results could vary from these estimated future cash flows. Estimation uncertainty relates to assumptions about future operating results and the application of an appropriate discount rate.
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Impairment of financial assets
The Company assesses at each statements of financial position date whether there is objective evidence that a financial asset or group of financial assets is impaired.
The Company recognizes expected credit losses (“ECL”) for accounts receivable based on the simplified approach. The simplified approach to the recognition of expected losses does not require the Company to track the changes in credit risk; rather, the Company recognizes a loss allowance based on lifetime expected credit losses at each reporting date from the date of the account receivable.
The Company measures expected credit loss by considering the risk of default over the contract period and incorporates forward-looking information into its measurement. ECLs are a probability-weighted estimate of credit losses.
ECLs are measured as the difference in the present value of the contractual cash flows that are due to the Company under the contract, and the cash flows that the Company expects to receive. The Company assesses all information available, including past due status, and forward looking macro- economic factors in the measurement of the ECLs associated with its assets carried at amortized cost.
The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.
New Accounting Pronouncements
The following accounting standards and amendments have been issued by the IASB or the International Financial Reporting Interpretations Committee that are not yet effective as of the date of the Company’s consolidated financial statements. The Company intends to adopt such standards upon the mandatory effective date.
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
The amendments to IAS1 provide a more general approach to the classification of liabilities based on the contractual arrangements in place at the reporting date. These amendments are effective for reporting periods beginning on or after January 1, 2023. The Company is evaluating the impact of the above amendments on its consolidated financial statements.
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Exhibit 99.3
Turbo Energy Announces Interim Results for the Period Ended June 30, 2023.
VALENCIA, SPAIN, Dec. 22, 2023 (GLOBE NEWSWIRE) -- Turbo Energy, S.A. (NASDAQ: TURB), the leading energy-saving technology company, leveraging artificial intelligence software, today announced its unaudited interim financial results for the six months ended June 30, 2023.
- Turbo Energy reported revenues of €7,2 million (approximately USD $7.9 million) and a net income of €697,000 for the six months ended June 30, 2023.
MANAGEMENT COMMENTARY
The year 2023 has been a period in which the residential and industrial self-consumption photovoltaic sector has been affected by a variety of external factors that have led to a reduction in volumes.
High interest rates, significant energy price decreases and subsidy reductions in some markets have resulted in weak demand for the period, which combined with high inventory levels in the distribution channels has contributed to a significant reduction in revenue volumes, especially in Europe, which is the main market of the Company, and affected Turbo Energy equally.
The Company, however, remains very optimistic about the coming years. This optimism comes from the strong development in Artificial Intelligence product lines and software that Turbo Energy has completed and is developing.
The positioning of Turbo Energy products at residential, industrial, and utility levels and the strong commitment to continuous software development combined with Artificial Intelligence that optimizes energy savings, will keep the Company at the forefront of the industry. In addition, the downward trend in the prices of components related to photovoltaic installations, especially batteries, has started again, which is increasing the already high profitability of these installations for end users. All sector forecasts issued by experts predict very significant growth in sales for the coming years. This is a global trend in all scales of installations.
Turbo Energy expects strong growth in the coming years, both due to sectoral expectations and to the international and product expansion plan initiated after the Company’s IPO in September 2023. The Company is relying on the strong competitive position of its Sunbox product line, which optimizes energy savings through the implementation of Artificial Intelligence, to capture market share in several countries and thus consolidate the expected growth.
BUSINESS HIGHLIGHTS
In June, 2023, Turbo Energy announced its new SunBox Industry product line, a storage solution focused on the solar, commercial and industrial self-consumption market. SunBox Industry is presented as a complete lithium-ion battery electricity storage and smart solar power management system, which utilizes Turbo Energy’s own artificial intelligence software.
In September 2023, Turbo Energy priced its initial public offering of 1,000,000 ADSs, representing 5,000,000 ordinary shares at a price of $5.00 per ADS to the public for a total of $5,000,000 of gross proceeds to the Company, before deducting underwriting discounts and offering expenses. The American Depositary Shares began trading on the Nasdaq Capital Market under the ticker symbol “TURB.”
In October, 2023, Turbo Energy announced another success after obtaining the patent, granted for Spain, for one of its software developments that allows it to position its product, SunBox, among the most innovative residential photovoltaic equipment on the market. Turbo Energy believes that this solution marks a milestone in the electric power industry by offering a comprehensive smart management experience for home photovoltaic installations, combining an algorithm powered by Artificial Intelligence (AI) with an electric vehicle charger, all in one.
In November, 2023, Turbo Energy announced a strategic alliance with the French multinational retailer, Leroy Merlin, to include Turbo´s residential photovoltaic product, Sunbox, in Loreoy Merlin´s range of photovoltaic products available in Spain.
In December, 2023, Turbo Energy announced that Movistar, a telecommunications leader in Spain and Latin America, has launched Turbo Energy’s GoSolar offering for sale through Movistar´s energy branch, Solar360.
FINANCIAL SUMMARY FOR SIX MONTH PERIOD ENDED JUNE 20, 2023
| ● | Revenue for the six months ended June 30, 2023 and 2022 was €7,211,917 (approximately $7,664,887) and €14,334,042, respectively, representing a decrease of 50%. |
| ● | Our cost of revenue decreased to €6,013,713 (approximately $6,555,975), or 50%, for the six months ended June 30, 2023 from €11,973,743 for the six months ended June 30, 2022. This decrease is in line relative to our decrease in revenues. |
| ● | Net loss for the six months ended June 30, 2023 and 2022 was €(697,311) (approximately $761,461) and €695,033, respectively. |
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| ● | Selling and administrative expenses decreased by € 31,845, or 4%, to €728,329 (approximately $795,335) for the six months ended June 30, 2023, from €760,174 for the six months ended June 30, 2022. The entity has been increasing its administrative expenses, but they decreased slightly with those of June 2022 because last year there were already IPO-related expenses that were not activated. |
| ● | Salaries and benefits increased by €39,262 or 10%, to €447,282 (approximately $488,432) for the six months ended June 30, 2023, from €408,020 for the six months ended June 30, 2022. Such an increase was primarily due to the increase in employee headcount in order to carry out international expansion efforts. |
| ● | Interest expenses increased by €26,336, or 20%, to €(159,197) (approximately $173,843) for the six months ended June 30, 2023, from €(132,861) for the six months ended June 30, 2022. The increase is related to the increase in interest rates that has been experienced over the course of 2023. |
| ● | Foreign exchange net income decreased by €79,570, or 249%, to € (47,584) (approximately $51,951) for the six months ended June 30, 2023, from €31,986 for the six months ended June 30, 2022. The decrease is due to the fluctuation of the Euro dollar throughout the year. |
| ● | Net cash used in operating activities was €949,934 (approximately $1,037,327) for the six months ended June 30, 2023, as compared to net cash provided by operating activities of €(2,675,209) for the six months ended June 30, 2022. |
| ● | Income tax expenses is €0 for the six months ended June 30, 2023, as compared to €(233,927) for the six months ended June 30, 2022, a decrease of €233,927, or 100%. The decrease in the income tax expense is due to the negative in net income before income tax. |
About Turbo Energy, S.A.:
Turbo Energy is a leading photovoltaic energy storage technology company based in Valencia, Spain. The Company develops innovative solutions that allow end users to harness the full potential of solar energy and reduce their electricity costs. With a combination of artificial intelligence and advanced technology, Turbo Energy is paving the way towards a more sustainable and energy-efficient future. For more information, please visit www.turbo-e.com.
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Forward-Looking Statements
Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements relating to the expected trading commencement and closing dates. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the uncertainties related to market conditions and the completion of the public offering on the anticipated terms or at all, and other factors discussed in the “Risk Factors” section of the preliminary prospectus filed with the SEC. Any forward-looking statements contained in this press release speak only as of the date hereof, and Turbo Energy, S.A. specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
For more information, please contact:
Skyline Corporate Communications Group, LLC
Scott Powell, President
One Rockefeller Plaza, 11th Floor
New York, NY 10020
Office: (646) 893-5835
Email: info@skylineccg.com
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Document And Entity Information |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Document Information Line Items | |
| Entity Registrant Name | TURBO ENERGY, S.A. |
| Document Type | 6-K |
| Current Fiscal Year End Date | --12-31 |
| Amendment Flag | false |
| Entity Central Index Key | 0001963439 |
| Document Period End Date | Jun. 30, 2023 |
| Document Fiscal Year Focus | 2023 |
| Document Fiscal Period Focus | Q2 |
| Entity File Number | 001-41813 |
Condensed Interim Consolidated Statements of Operations (Parentheticals) - € / shares |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Profit or loss [abstract] | ||
| Diluted Net Income Per Share (in Dollars per share) | € (0.01) | € 0.01 |
| Weighted Average Number of Common Shares Outstanding - Diluted (in Shares) | 50,085,700 | 50,085,700 |
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) - EUR (€) |
Number of Outstanding Shares |
Share Capital |
Reserve |
Retained Earnings (Accumulated Deficit) |
Total |
||
|---|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2021 | [1] | € 4,285 | € 116,046 | € 267,222 | € 387,553 | ||
| Balance (in Shares) at Dec. 31, 2021 | [1] | 50,085,700 | |||||
| Transfer from retained earnings to reserve | 267,222 | (267,222) | |||||
| Net income(loss) | 695,033 | 695,033 | |||||
| Balance at Jun. 30, 2022 | [1] | 4,285 | 383,268 | 695,033 | 1,082,586 | ||
| Balance (in Shares) at Jun. 30, 2022 | [1] | 50,085,700 | |||||
| Balance at Dec. 31, 2022 | 2,504,285 | 383,268 | 1,028,578 | 3,916,131 | |||
| Balance (in Shares) at Dec. 31, 2022 | 50,085,700 | ||||||
| Transfer from retained earnings to reserve | 1,028,578 | (1,028,578) | |||||
| Net income(loss) | (697,313) | (697,313) | |||||
| Balance at Jun. 30, 2023 | € 2,504,285 | € 1,411,846 | € (697,313) | € 3,218,818 | |||
| Balance (in Shares) at Jun. 30, 2023 | 50,085,700 | ||||||
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Entity Information |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Entity Information [Abstract] | |
| ENTITY INFORMATION | NOTE 1 – ENTITY INFORMATION
Turbo Energy, S.A. (the “Company), was incorporated under the name of Distritech Solutions S.L. on September 18, 2013 under the laws of the Kingdom of Spain. The company then changed its name to Solar Rocket S.L. on October 7, 2013. On April 8, 2021, Solar Rocket S.L. merged with a Spanish corporation Turbo Energy S.L.U. Turbo Energy S.L.U then became a wholly owned subsidiary of Solar Rocket S.L. This merger was approved by the Board of Directors of both companies. Following the merger, the company changed its name to Turbo Energy S.L. on April 8, 2021. On February 8, 2023, we transformed the company from a Spanish unipersonal limited company to a Spanish limited stock company. As such, our company’s name was changed to Turbo Energy S.A.
The corporate purpose of the Company, in accordance with its bylaws, consists of the acquisition, distribution and sale of electrical and electronic material for the development of renewable energy projects, such as solar panels, inverters, chargers, regulators, batteries and structures, among others. We design, develop, and distribute equipment for the generation, management, and storage of photovoltaic energy. Our energy storage products are managed, from the cloud and through the inverter of the installation, by an advanced software system which is optimized by artificial intelligence (“AI”). The key advantage is that our products, comparing to conventional battery storage systems, reduce electricity bill and protect the installation from power outages. Currently, we primarily sell inverters, batteries, and photovoltaic modules to installers and other distributors for residential consumers located in Spain.
The Company is part of the Umbrella Solar Investment Group, whose main shareholder is Crocodile Investment, S.L.U, (hereinafter, the ultimate partner), with registered office in Valencia. The majority shareholder of the Turbo Energy, S.A is Umbrella Solar Investment, S.A (hereinafter, the majority shareholder), which is part of the Umbrella Solar Investment Group.
On November 8, 2022, Turbo Energy S.A. with the purpose to develop a new business in the field of self-consumption of electricity, acquired the 100% of the ordinary shares for a total amount of €2,250 of IM2 Energía Solar Proyecto 35 S.L.U., a company under common control by our CEO and established under the laws of the Kingdom of Spain on August 1, 2019. Following the transaction, IM2 Energía Solar Proyecto 35 S.L.U. became our wholly owned subsidiary. On November 29, 2022 changed its name to Turbo Energy Solutions S.L.U. Since its incorporation this company has had a very insignificant activity.
Merger by absorption process
On April 8, 2021, the merger of Solar Rocket, S.L. (absorbing company) and Turbo Energy, S.L.U. (absorbed company) was formalized in a public deed, being registered in the Mercantile Registry of Valencia on August 9, 2021. The merger process, approved by the respective shareholders’ meetings on June 30, 2020, consisted of the extinction without liquidation of the absorbed company, transferring its assets and liabilities en bloc to the absorbing company, which acquired, by universal succession, the rights and obligations of the absorbed company. The Company recorded the assets and liabilities contributed by the absorbed companies at the values established in the accounting regulations in force at that time. The consolidated financial statements for the year 2021 include the information required by the regulations in relation to the aforementioned merger process.
On the same date of the merger described above, the absorbing company (Solar Rocket, S.L.) changed its corporate name to Turbo Energy, S.L.U. as described above. |
Material Accounting Policies |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||
| Material Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
| MATERIAL ACCOUNTING POLICIES | NOTE 2 – MATERIAL ACCOUNTING POLICIES
Basis of presentation
The notes presented in our condensed unaudited interim consolidated financial statements include only significant events and transactions and are not fully inclusive of all matters normally disclosed in our annual audited financial statements; thus, our unaudited interim consolidated financial statements are referred to as condensed. Our unaudited condensed interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 202, included in the Company’s F-1/A as filed with the Securities and Exchange Commission on September 18, 2023.
The unaudited condensed interim consolidated financial statements of Turbo Energy, S.A. have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS. The consolidated financial statements comply with IFRS as issued by the International Accounting Standards Board (“IASB”). Our condensed interim consolidated financial statements comply with International Accounting Standard 34, Interim Financial Reporting and reflect all adjustments (which are of a normal recurring nature) that are, in our opinion, necessary for a fair statement of the results for the interim periods presented.
These consolidated financial statements were approved by the board of directors of the Company on December 22nd, 2023.
The consolidated financial statements of the Company were prepared on a historical cost basis except where certain financial instruments that are required to be measured at fair value. These consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
The consolidated financial statements are presented in Euro, which is the Company’s functional currency. Transactions in currencies other than the functional currency are recorded in accordance with the policies stated under Foreign Currency Transaction in note 2.
Reclassification
Certain amounts from prior period have been reclassified to conform to the current period presentation. These reclassifications had no impact on reported operating and net loss.
Revenue recognition
The Company design, develop, and distribute equipment for the generation, management, and storage of photovoltaic energy. Our energy storage products are managed, from the cloud and through the inverter of the installation, by an advanced software system which is optimized by artificial intelligence (“AI”). The key advantage is that our products, comparing to conventional battery storage systems, reduce electricity bill and protect the installation from power outages.
The Company’s revenue is primarily generated from sales of the inverters, batteries, and photovoltaic modules to installers and other distributors for residential consumers under individual customer purchase orders, some of which have underlying master sales agreements that specify terms governing the product sales.
The Company recognizes such revenue at the point in time when control of the products is transferred to the customer at the estimated net consideration for which collection is probable, taking into account the customer’s rights to unit rebates, and rights to return unsold product.
Transfer of control occurs either when products are shipped to or received by the distributor or direct customer, based on the terms of the specific agreement with the customer, if the Company has a present right to payment and transfer of legal title and the risks and rewards of ownership to the customer has occurred. For most of the Company’s product sales, transfer of control occurs upon shipment to the distributor or direct customer. In assessing whether collection of consideration from a customer is probable, the Company considers the customer’s ability and intention to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 to 60 days from the invoice date, which occurs on the date of transfer of control of the products to the customer.
Since payment terms are less than a year, the Company has elected the practical expedient and does not assess whether a customer contract has a significant financing component.
A five-step approach is applied in the recognition of revenue: (1) identify the contract with a customer, (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, and (5) recognize revenue when the Company satisfies a performance obligation. Customer purchase orders plus the underlying master sales agreements are considered to be contracts with the customer for purposes of applying the five-step approach.
Returns under the Company’s general assurance warranty of products have not been material historically and warranty-related services are not considered a separate performance obligation under the customer orders.
Each distinct promise to transfer products is considered to be an identified performance obligation for which revenue is recognized upon transfer of control of the products to the customer. Although customers may place orders for products to be delivered on multiple dates that may be in different quarterly reporting periods, all of the orders are scheduled within one year from the order date. The Company has opted to not disclose the portion of revenues allocated to partially unsatisfied performance obligations, which represent products to be shipped within 12 months under open customer purchase orders, at the end of the current reporting period. The Company has also elected to record sales commissions when incurred, as the period over which the sales commission asset that would have been recognized is less than one year.
Concentration of Revenue by Customer
For the six months ended June 30, 2023 and 2022, there was one customer who comprised greater than 10% of the Company’s revenue and represented 11.7% and 12.3% of the Company’s revenue, respectively.
Cash and Cash Equivalents
Cash consist of highly liquid instruments purchased with an original maturity of three months or less. As of June 30, 2023 and December 31, 2022, the Company had cash of €498,099 and €502,585, respectively. The Company does not have any cash equivalents.
The Company minimizes the concentration of credit risk associated with its cash by maintaining its cash with high-quality insured financial institutions. However, cash balances in excess of the Spanish government insured limit (Fondo de Garantía de Depósitos (FDG)) of €100,000 are at risk.
Accounts Receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable.
The Company will run credit checks on all customers that request term payment.
Inventory
Inventories are valued at their acquisition cost, production cost or net realizable value, whichever is lower. Discounts for prompt payment are included as a lower price, whether or not they appear on the invoice and assigning value to its inventories. The Company adopts the weighted average price method.
Net realizable value represents the estimated sales price less all estimated costs that will be incurred in the process of commercialization, sales and distribution.
The Company makes the appropriate valuation adjustments, recording impairment expense when the net realizable value of the inventories is less than their acquisition cost.
Property and equipment
Property and equipment is recognized and subsequently measured at cost less accumulated depreciation and any accumulated impairment losses, if any. When components of property and equipment have different useful lives they are accounted for separately. Depreciation is provided at rates which are calculated to write off the assets over their estimated useful lives as follows:
Intangible assets
Acquired intangible assets are initially measured at cost. Following the initial recognition, intangible assets are measured at cost less any accumulated amortization and any impairment losses. The useful lives of intangible assets are either definite or indefinite. Intangible assets that have a finite useful life are amortized over the assessed useful economic life and are assessed for impairment when there are any indicators present that the intangible asset may be impaired. The Company reviews the amortization period and method at least annually, and any changes are treated as changes in accounting estimates and applied prospectively.
Computer application and webpage are amortized over estimated useful lives of three years and Software is amortized over estimated useful lives of five years.
Deferred Offering Costs
Deferred offering costs represent legal, accounting and other direct costs related to the IPO, which will be completed on September 22, 2023. Upon the completion of IPO, direct offering costs of will be reclassified to additional paid-in capital along with underwriters’ fees paid, net against IPO proceeds received. The Company recorded €409,710 and € of deferred offering costs as a non-current asset in the accompanying balance sheets as of June 30, 2023 and December 31, 2022, respectively. (Note 16)
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the agreement on the inception date.
As a lessee, the Company recognizes a lease obligation and a right-of-use asset in the statements of financial position on a present-value basis at the date when the leased asset is available for use. Each lease payment is apportioned between a finance charge and a reduction of the lease obligation. Finance charges are recognized in finance cost in the statements of income and comprehensive income. The right of-use assets are depreciated over the shorter of its estimated useful life and the lease term on a straight-line basis.
Lease obligations are initially measured at the net present value of the following lease payments:
Lease payments are discounted using the interest rate implicit in the lease, or if this rate cannot be determined, the Company’s incremental borrowing rate. Right-of-use assets are initially measured at cost comprising the following:
Payments associated with short-term leases and leases of low-value assets are recognized on a straight- line basis as an expense in the statements of income and comprehensive income. Short-term leases are leases with a lease term of 12 months or less.
Share capital
Ordinary shares are classified as equity, net of transaction costs directly attributable to the issue of ordinary shares.
Ordinary shares issued for consideration other than cash are based on their market value at the date the ordinary shares are issued.
Provisions
Provisions are recognized when there is a present legal or constructive obligation as a result of a past event, for which it is probable that a transfer of economic benefits will be required to settle the obligation, and where a reliable estimate can be made of the amount of the obligation. Provisions are discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability, if material. Where discounting is used, the increase in the provision due to passage of time (“accretion expense”) is recognize as an expense on the statements of income and comprehensive income.
Foreign currency transactions
The functional currency used by the Company is the euro. Consequently, operations in currencies other than the euro are considered to be denominated in foreign currency and are recorded at the exchange rates in force on the dates of the operations.
At year-end, monetary assets and liabilities denominated in foreign currency are converted by applying the exchange rate on the balance sheet date. The profits or losses revealed are charged directly to the profit and loss account for the year in which they occur.
On each balance sheet date, monetary assets and liabilities in foreign currency are converted at the rates in force on the closing date. Non-monetary items in foreign currency measured in terms of historical cost are converted at the exchange rate on the date of the transaction.
The exchange differences of the monetary items that arise both when liquidating them and when converting them at the closing exchange rate, are recognized in the results of the year, except those that are part of the investment of a business abroad, which are recognized directly in equity net of taxes until the time of its disposal.
Income per share
Basic income per share is calculated by dividing the income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding in the period. For all periods presented, the income attributable to ordinary shareholders equals the reported income attributable to owners of the Company.
Diluted income per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of ordinary shares outstanding for the calculation of diluted income per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase ordinary shares at the average market price during the period.
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding, as of June 30, 2023 and December 31, 2022.
Impairment of non-financial assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication that the carrying amount is not recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Management assesses impairment of non-financial assets such as property and equipment and intangible assets. In assessing impairment, management estimates the recoverable amount of each asset or cash generating unit (“CGU”) based on expected future cash flows. The Company has applied judgment in its assessment of the appropriateness of the determination of CGU’s. When measuring expected future cash flows, management makes assumptions about future growth of profits which relate to future events and circumstances. Actual results could vary from these estimated future cash flows. Estimation uncertainty relates to assumptions about future operating results and the application of an appropriate discount rate.
Financial instruments
Financial assets
Financial assets are classified as either financial assets at fair value through profit and loss (“FVTPL”), amortized cost, or fair value through other comprehensive income (“FVTOCI”). The Company determines the classification of its financial assets at initial recognition.
Classification and measurement
Classification determines how financial assets and financial liabilities are accounted for in financial statements and, in particular, how they are measured on an ongoing basis. IFRS 9 Financial Instruments approach for the classification of financial assets is driven by cash flow characteristics and the business model in which an asset is held. This single, principle-based approach replaces prior rule-based requirements. The model also results in a single impairment model being applied to all financial instruments.
Financial assets at FVTPL
Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of income and comprehensive income. Realized and unrealized gains and income arising from changes in the fair value of the financial asset held at FVTPL are included in the statements of income and comprehensive income in the period in which they arise. The Company has classified cash as FVTPL.
Financial assets at FVTOCI
Financial assets at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. There are no financial assets classified as FVTOCI.
Financial assets at amortized cost
Financial assets at amortized cost are initially recognized at fair value, net of transaction costs, and subsequently carried at amortized cost less any impairment. They are classified as current assets or non- current assets based on their maturity date. The Company has classified accounts receivable and amounts due from related parties at amortized cost.
Financial assets are derecognized when they mature or are sold, and substantially all the risks and rewards of ownership have been transferred.
Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or at amortized cost. The Company determines the classification of its financial liabilities at initial recognition.
Financial liabilities are classified as measured at amortized cost, net of transaction costs unless classified as FVTPL. The Company’s accounts payable and accrued liabilities, amounts due to related parties, lease liabilities and bank loans are classified as measured at amortized cost.
The Company’s bank loans were classified as measured at amortized cost at June 30, 2023 and December 31, 2022. During the six months ended June 30, 2023 and 2022, the Company incurred €138,109 and €66,572 interest on bank loans.
Fair value measurement
Fair value measurements are made using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value:
The fair value measurement is categorized in its entirety by reference to its lowest level of significant input. Fair value is based on estimated cash flows, discounted at interest rates for similar instruments.
The carrying amounts shown of the Company’s financial instruments including cash, accounts receivable, inventories, accounts payable and accrued liabilities approximate their fair value (Level 1) due to the short-term maturities of these instruments.
Impairment of financial assets
The Company assesses at each statements of financial position date whether there is objective evidence that a financial asset or group of financial assets is impaired.
The Company recognizes expected credit losses (“ECL”) for accounts receivable based on the simplified approach. The simplified approach to the recognition of expected losses does not require the Company to track the changes in credit risk; rather, the Company recognizes a loss allowance based on lifetime expected credit losses at each reporting date from the date of the account receivable.
The Company measures expected credit loss by considering the risk of default over the contract period and incorporates forward-looking information into its measurement. ECLs are a probability-weighted estimate of credit losses.
ECLs are measured as the difference in the present value of the contractual cash flows that are due to the Company under the contract, and the cash flows that the Company expects to receive. The Company assesses all information available, including past due status, and forward looking macro- economic factors in the measurement of the ECLs associated with its assets carried at amortized cost.
The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.
New Accounting Pronouncements
The following accounting standards and amendments have been issued by the IASB or the International Financial Reporting Interpretations Committee that are not yet effective as of the date of the Company’s consolidated financial statements. The Company intends to adopt such standards upon the mandatory effective date.
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
The amendments to IAS1 provide a more general approach to the classification of liabilities based on the contractual arrangements in place at the reporting date. These amendments are effective for reporting periods beginning on or after January 1, 2023. The Company is evaluating the impact of the above amendments on its consolidated financial statements. |
Summary of Significant Accounting Judgements, Estimates and Assumptions |
6 Months Ended |
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Jun. 30, 2023 | |
| Summary of Significant Accounting Judgements, Estimates and Assumptions [Abstract] | |
| SUMMARY OF SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of these consolidated financial statements in accordance with IFRS requires management to make estimates and judgments that affect the recognition, measurement and disclosure of amounts reported in these consolidated financial statements and accompanying notes. The reported amounts and note disclosures are determined using management’s best estimates based on assumptions that reflect the most probable set of economic conditions and planned courses of action. Actual results may differ from such estimates. These judgments, estimates and assumptions are reviewed regularly.
The following are significant management judgments, estimates and assumptions used in applying the accounting policies of the Company that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses:
Leases
The Company exercises judgment in determining the approximate lease term on a lease by lease basis. The Company considers all facts and circumstances that may create an economic incentive to exercise renewal options and also evaluated the economic incentive related to continuation of existing leaseholds. The Company is also required to estimate specific criteria in order to estimate the carrying amount of right-of-use assets and lease liabilities including the incremental borrowing rate and effective interest rate.
Valuation of accounts receivable
Management monitors the financial stability of its customers and the environment in which they operate to make estimates regarding the likelihood that the individual trade balances will be paid. Credit risks for outstanding customer receivables are regularly assessed and allowances are recorded for estimated losses, if required.
Valuation of inventory
Management makes estimates of future customer demand for products when establishing appropriate provisions for inventory obsolescence. In making these estimates, management considers the aged of inventory and profitability of recent sales.
Recoverability of income taxes
The measurement and assessment of income tax assets and liabilities requires management to make judgments in the interpretation and application of the relevant tax laws and estimates of the Company’s abilities to utilize losses carried forward to offset taxes payable on future taxable income. The actual amount of income taxes only becomes final upon filing and acceptance of the tax return by the relevant tax authorities, which occurs subsequent to the issuance of the financial statements.
Useful life of property and equipment
Changes in the intended use of property and equipment as well as changes in technology or economic conditions may cause the estimated useful life of these assets to change. The change in useful lives could impact the depreciation expense and carrying value of property and equipment.
Useful life of intangible assets
Changes in the intended use of intangible assets with determinable useful lives as well as changes in technology or economic conditions may cause the estimated useful life of these assets to change. The change in useful lives could impact the amortization expense and carrying value of intangible assets. |
Accounts Receivable and Other Receivables |
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| Accounts Receivable and Other Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES | NOTE 4 – ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
Accounts receivable and other receivables as of June 30, 2023 and December 31, 2022 are summarized as below:
As of June 30, 2023 and December 31, 2022, the allowance for doubtful accounts of €338,062 and €333,528. During the six months ended June 30, 2023 and 2022, the Company recorded bad debt expense of €4,534 and bad debt recovery of €10,859. |
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Inventories |
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Jun. 30, 2023 | |
| Inventories [Abstract] | |
| INVENTORIES | NOTE 5 – INVENTORIES
As of June 30, 2023 and December 31, 2022, the Company had finished goods of €8,742,895 and €10,106,216, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded provision on slowing moving inventory in the statements of operations of € 0 and € 0, respectively. As of June 30, 2023 and December 31, 2022, there are provision for obsolescence of €90,345 and €90,345, respectively.
The Company outsourced the management of inventories to a third party with all the inventories located in warehouse owned by the third parties. The Company pays a monthly fee to the warehouse company for insurance coverage of the inventories, as stated in the agreement between both parties. |
Prepaid Expense |
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| Prepaid Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PREPAID EXPENSE | NOTE 6 – PREPAID EXPENSE
Prepaid expense as of June 30, 2023 and December 31, 2022 are summarized as below:
As of June 30, 2023 and December 31, 2022, the Company has advancement to suppliers for purchase of inventory of €884,768 and €632,185, respectively. |
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Property and Equipment |
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| Property and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT | NOTE 7 – PROPERTY AND EQUIPMENT
Property and equipment as of June 30, 2023 and December 31, 2022 are summarized as follows:
During the six months ended June 30, 2023 and 2022, the Company acquired property and equipment of €19,333 and €2,565, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded depreciation expense of €10,051 and €1,321, respectively. |
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Intangible Assets |
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| Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSETS | NOTE 8 – INTANGIBLE ASSETS
Intangible assets as of June 30, 2023 and December 31, 2022 are summarized as follows:
As of June 30, 2023 and December 31, 2022, the Company has intangible assets of €561,698 and €369,005, of which software development of €338,120 for the new version of the Sun Box, an all-in-one device that integrates most of the equipment for domestic photovoltaic installation, are not yet ready for use as intended by management and therefore no cumulative amortization has been recorded to June 30, 2023.
During the six months ended June 30, 2023 and 2022, the Company recorded amortization expense of €25,142 and €429, respectively, and no impairment loss was incurred on the intangible assets. |
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Accounts Payable and Accrued Liabilities |
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| Accounts Payable and Accrued Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | NOTE 9 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued labilities as of June 30, 2023 and December 31, 2022 are summarized as follows:
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Related Party Transactions |
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED PARTY TRANSACTIONS | NOTE 10 – RELATED PARTY TRANSACTIONS
Amount due from (to) as of June 30, 2023 are summarized as follows:
Due from related parties:
Due to related parties:
All the amount due to and from related parties are unsecured, non-interest bearing and due on demand, except for the loan agreement from Umbrella Solar of €3,800,000. This loan was formalized and signed on June 30 for a period of 5 years, with a market interest rate of 6.25% per year, payable bi-annually.
Amount due from (to) as of December 31, 2022 are summarized as follows:
Due from related parties:
Due to related parties:
Amount due to and from related parties are unsecured, non-interest bearing and due on demand.
Transactions with related parties during the six months ended June 30, 2023 and 2022 were summarized as follows:
Six Months Ended June 30, 2023
Six Months Ended June 30, 2022
Our related party transactions during the fiscal year ended December 31, 2021, include sales of products or services made to or purchases of products or services from affiliated group companies that are under common control and to associates of such group companies. These transactions include income accrued from the commercial activities of our company. The purchases relate to merchandise that we sell in its normal course of commercial operations.
Umbrella Solar Investment, as the holding company of the group, assumes all structural costs such as those related to the human resources, licenses, legal, tax, labor, marketing, and other generic structural costs. A margin of 13% is applied to these costs and the resulting amount is distributed to the four most significant companies in the group based on their estimated revenue in the monthly management fees.
During the six months ended June 30, 2023 and 2022, the Company incurred management fees to Umbrella Solar Investment, S.A, of € 508,590 and € 142,433, respectively.
No compensation has been paid to the executives under Crocodile Investment SLU. The company expects to continue with the same allocation structure in the future. |
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Bank Loans |
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| Bank Loans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BANK LOANS | NOTE 11 – BANK LOANS
Bank loans as of June 30, 2023 and December 31, 2022 are summarized as follows:
The terms and conditions of outstanding bank loans are as follows:
During the six months ended June 30, 2023 and 2022, the Company incurred bank loan interest expense of €4,132 and €5,215, respectively.
The Company’s obligations are secured by substantially all of the assets of the Company.
Principal repayments to maturity by fiscal year are as follows:
In addition, the Company maintains the following lines of credit:
As of June 30, 2023
As of December 31, 2022
The Company has €3.4 million facility that is unsecured and can be drawn down to meet short-term financing needs. The facility has a maturity of one to three years for the ICO credit lines that renews automatically at the option of the Company. Interest is payable at an average rate of Euribor plus 2.11 basis points. During the six months ended June 30, 2023 and 2022, the Company incurred interest expense from line of credit of €133,977 and €61,357, respectively. |
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Share Capital |
6 Months Ended |
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Jun. 30, 2023 | |
| Share Capital [Abstract] | |
| SHARE CAPITAL | NOTE 12 – SHARE CAPITAL
Authorized
The Company has authorized 50,085,700 ordinary shares with a par value of €0.05.
Issuances
During December 2022, we issued 50,000,000 ordinary shares (pre-stock split: 2,500,000 shares) for proceeds of €2,500,000, to our parent company, who is also our sole shareholder.
The Company has reflected this issuance of ordinary shares for all periods presented due to their nominal value, relative to the planned Initial Public Offering. The Company accounted for the proceeds as share capital in the year ended December 31, 2022. Earnings per share and ordinary shares outstanding have been retroactively reflected to show this issuance from the earliest period reported.
Stock Split
In February 2023, the Company approved a forward stock split of the issued and outstanding ordinary shares on a 20-for-1 basis. We increased our issued and outstanding share capital from 2,504,285 ordinary shares to 50,085,700 ordinary shares. The approval, from the Commercial Registry of Valencia, for the forward stock split has been approved on February 1, 2023. The consolidated financial statements retrospectively reflected the forward stock split. |
Reserve |
6 Months Ended |
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Jun. 30, 2023 | |
| Reserve [Abstract] | |
| RESERVE | NOTE 13 – RESERVE
As of June 30, 2023 and December 31, 2022, reserve was €1,411,846 and €383,268 comprised of legal reserves and other reserves, respectively.
Legal reserve
In accordance with the capital company law, companies must allocate amount equal to 10% of the profit for the year to the legal reserve until it reaches 20% of the share capital. The legal reserve may only be used to increase the share capital. Except for the above purpose and as long as it does not exceed 20% of the share capital, the legal reserve can only be used to offset losses, provided there are no other reserves available sufficient for this purpose. As of December 31, 2022, and 2021, it was partially constituted after the aforementioned capital increase. As of June 30, 2023 and December 31, 2022, legal reserve was €857 and €857, respectively.
Other reserve
The Company maintains unrestricted reserve for undistributed profits from previous years. As of June 30, 2023 and December 31, 2022, the other reserves were € 1,410,989€and €382,411 , respectively. |
Leases |
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| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASES | NOTE 14 – LEASES
As of June 30, 2023 and December 31, 2022, the Company had the following lease obligations:
On September 8, 2020, the Company entered into a vehicle lease agreement under a four-year term and monthly lease payment of €527.
On January 1, 2021, the Company entered into an office lease agreement under a five-year term and monthly lease payment of €827 for the first year with an escalation rate of Consumer Price Index (CPI) plus 2% per annum. On June 30, 2022, the Company terminated the office lease contract.
On June 1, 2022, the Company entered into an office lease agreement under a two-year term extensible for three years upon expiry and monthly lease payment of €3,384 with an escalation rate of Consumer Price Index (CPI) plus 2% per annum.
On September 26, 2022, the Company entered into a vehicle lease agreement under a three-year term and monthly lease payment of €420.
On November 15, 2022, the Company entered into a vehicle lease agreement under a three-year term and monthly lease payment of €417.
The following table summarizes the maturity of our lease liabilities as of June 30, 2023:
As of June 30, 2023 and December 31, 2022, the Company has right-of-use assets as follows:
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Financial Instruments and Risk Management |
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| Financial Instruments and Risk Management [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FINANCIAL INSTRUMENTS AND RISK MANAGEMENT | NOTE 15 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Set out below are categories of financial instruments and fair value measurements as of June 30, 2023 and December 31, 2022:
Liquidity risk
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due in the normal course of business. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price. Difficulty accessing capital markets could impair the Company’s capacity to grow, execute its business model and generate financial returns. The Company manages its liquidity risk by monitoring its operating requirements to ensure financial resources are available, actively monitoring market conditions and by diversifying its sources of funding and maintaining a diversified maturity profile of its debt obligations.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company’s main credit risk relates to its cash and accounts receivable. The Company’s credit risk is reduced by a broad customer base and a review of customer credit profiles.
The Company’s maximum exposure to credit risk corresponds to the carrying amount for all cash and accounts receivable. Cash is held with prominent financial institutions. Accounts receivable are held with vendors in which the Company has a historically strong relationship with or related to VAT receivable.
The Company mitigates credit risk associated with its trade receivables through established credit approvals, limits and a regular monitoring process. The Company generally considers the credit quality of its financial assets that are neither past due nor impaired to be solid. Credit risk is further mitigated due to the large number of customers and their dispersion across geographic areas.
As of June 30, 2023 and December 31, 2022, there was one customer and one customer with amount outstanding that exceed 10% of the Company’s revenue that totaled 13% and % in aggregate, respectively. The Company assessed credit risk as low.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is not exposed to significant currency risk.
Interest risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its lines of credit due to fluctuations in interest rates. The Company’s bank loans and leases have fixed rates of interest resulting in limited interest rate fair value risk for the Company. The Company manages interest rate risk by seeking financing terms in individual arrangements that are most advantageous taking into account all relevant factors, including credit margin, term and basis. The risk management objective is to minimize the potential for changes in interest rates to cause adverse changes in cash flows to the Company.
Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is not exposed to other price risk.
Capital management
The Company’s capital consists of share capital and reserve. The Company’s capital management is designed to ensure that it has sufficient financial flexibility both in the short and long-term to support its financial obligations and the future development of the business.
The Company manages its capital with the following objectives:
There were no changes to the Company’s approach to capital management during the six months ended June 30, 2023 and year ended December 31, 2022. The Company is not subject to externally imposed capital requirements. |
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Deferred Offering Costs |
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| Deferred Offering Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEFERRED OFFERING COSTS | NOTE 16 – DEFERRED OFFERING COSTS
As of June 30, 2023 and December 31, 2022, the Company incurred deferred offering costs from its Initial Public Offering as follows:
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Revenue |
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| Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| REVENUE | NOTE 17 – REVENUE
The Company’s sales derived from sales of electrical and electronic material. The following is the Company’s revenue by geographical markets during the six months ended June 30, 2023 and 2022:
During the six months ended June 30, 2023 and 2022, the Company recognized revenue of €7,211,916 and €14,334,042, of which €184,362 and €544,786 derived from related parties, respectively. |
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Cost of Revenue |
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| COST OF REVENUE | NOTE 18 – COST OF REVENUE
During the six months ended June 30, 2023 and 2022, the Company incurred cost of sales of €6,013,713 and €12,004,439, of which €0 and €30,696 derived from related parties, respectively. |
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Selling and Administrative Expenses |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling and Administrative Expenses[Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SELLING AND ADMINISTRATIVE EXPENSES | NOTE 19 – SELLING AND ADMINISTRATIVE EXPENSES
The Company incurred the following selling and administrative expenses during the six months ended June 30, 2023 and 2022.
During the six months ended June 30, 2023 and 2022, the Company incurred selling and administrative expenses of €1,236,919 and €902,607, of which €508,590 and €142,433 derived from related parties, respectively. |
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Supplemental Cash Flow Information |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||
| Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION | NOTE 20 – SUPPLEMENTAL CASH FLOW INFORMATION
Set out below are non-cash investing and financing activities during the six months ended June 30, 2023 and 2022:
Non-cash investing and financing activities:
During the six months ended June 30, 2023 and 2022, the Company paid interest of € 158,321 and € 131,282 and income taxes of €0 and € 233,927, respectively. |
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Subsequent Events |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Subsequent events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 21 – SUBSEQUENT EVENTS
Between the end of six months ended June 30, 2023 and the date of preparation of these consolidated financial statements, the Company has gone through a main subsequent event, which is its successful debut on the Nasdaq stock exchange on September 22, 2023
The Company announced initial public offering of 1,000,000 American Depositary Shares (“ADSs”), representing 5,000,000 ordinary shares, at a price of $5.00 per ADS to the public for a total of $5,000,000 of gross proceeds to the Company, before deducting underwriting discounts and offering expenses (the “Offering”). The American Depositary Shares began trading on the Nasdaq Capital Market under the symbol “TURB.” |
Accounting Policies, by Policy (Policies) |
6 Months Ended | ||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||
| Basis of presentation | Basis of presentation The notes presented in our condensed unaudited interim consolidated financial statements include only significant events and transactions and are not fully inclusive of all matters normally disclosed in our annual audited financial statements; thus, our unaudited interim consolidated financial statements are referred to as condensed. Our unaudited condensed interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 202, included in the Company’s F-1/A as filed with the Securities and Exchange Commission on September 18, 2023. The unaudited condensed interim consolidated financial statements of Turbo Energy, S.A. have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS. The consolidated financial statements comply with IFRS as issued by the International Accounting Standards Board (“IASB”). Our condensed interim consolidated financial statements comply with International Accounting Standard 34, Interim Financial Reporting and reflect all adjustments (which are of a normal recurring nature) that are, in our opinion, necessary for a fair statement of the results for the interim periods presented. These consolidated financial statements were approved by the board of directors of the Company on December 22nd, 2023. The consolidated financial statements of the Company were prepared on a historical cost basis except where certain financial instruments that are required to be measured at fair value. These consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. The consolidated financial statements are presented in Euro, which is the Company’s functional currency. Transactions in currencies other than the functional currency are recorded in accordance with the policies stated under Foreign Currency Transaction in note 2. |
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| Reclassification | Reclassification Certain amounts from prior period have been reclassified to conform to the current period presentation. These reclassifications had no impact on reported operating and net loss. |
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| Revenue recognition | Revenue recognition The Company design, develop, and distribute equipment for the generation, management, and storage of photovoltaic energy. Our energy storage products are managed, from the cloud and through the inverter of the installation, by an advanced software system which is optimized by artificial intelligence (“AI”). The key advantage is that our products, comparing to conventional battery storage systems, reduce electricity bill and protect the installation from power outages. The Company’s revenue is primarily generated from sales of the inverters, batteries, and photovoltaic modules to installers and other distributors for residential consumers under individual customer purchase orders, some of which have underlying master sales agreements that specify terms governing the product sales. The Company recognizes such revenue at the point in time when control of the products is transferred to the customer at the estimated net consideration for which collection is probable, taking into account the customer’s rights to unit rebates, and rights to return unsold product. Transfer of control occurs either when products are shipped to or received by the distributor or direct customer, based on the terms of the specific agreement with the customer, if the Company has a present right to payment and transfer of legal title and the risks and rewards of ownership to the customer has occurred. For most of the Company’s product sales, transfer of control occurs upon shipment to the distributor or direct customer. In assessing whether collection of consideration from a customer is probable, the Company considers the customer’s ability and intention to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 to 60 days from the invoice date, which occurs on the date of transfer of control of the products to the customer.
Since payment terms are less than a year, the Company has elected the practical expedient and does not assess whether a customer contract has a significant financing component. A five-step approach is applied in the recognition of revenue: (1) identify the contract with a customer, (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, and (5) recognize revenue when the Company satisfies a performance obligation. Customer purchase orders plus the underlying master sales agreements are considered to be contracts with the customer for purposes of applying the five-step approach. Returns under the Company’s general assurance warranty of products have not been material historically and warranty-related services are not considered a separate performance obligation under the customer orders. Each distinct promise to transfer products is considered to be an identified performance obligation for which revenue is recognized upon transfer of control of the products to the customer. Although customers may place orders for products to be delivered on multiple dates that may be in different quarterly reporting periods, all of the orders are scheduled within one year from the order date. The Company has opted to not disclose the portion of revenues allocated to partially unsatisfied performance obligations, which represent products to be shipped within 12 months under open customer purchase orders, at the end of the current reporting period. The Company has also elected to record sales commissions when incurred, as the period over which the sales commission asset that would have been recognized is less than one year. Concentration of Revenue by Customer For the six months ended June 30, 2023 and 2022, there was one customer who comprised greater than 10% of the Company’s revenue and represented 11.7% and 12.3% of the Company’s revenue, respectively. |
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| Cash and Cash Equivalents | Cash and Cash Equivalents Cash consist of highly liquid instruments purchased with an original maturity of three months or less. As of June 30, 2023 and December 31, 2022, the Company had cash of €498,099 and €502,585, respectively. The Company does not have any cash equivalents. The Company minimizes the concentration of credit risk associated with its cash by maintaining its cash with high-quality insured financial institutions. However, cash balances in excess of the Spanish government insured limit (Fondo de Garantía de Depósitos (FDG)) of €100,000 are at risk. |
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| Accounts Receivable | Accounts Receivable Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company will run credit checks on all customers that request term payment. |
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| Inventory | Inventory Inventories are valued at their acquisition cost, production cost or net realizable value, whichever is lower. Discounts for prompt payment are included as a lower price, whether or not they appear on the invoice and assigning value to its inventories. The Company adopts the weighted average price method. Net realizable value represents the estimated sales price less all estimated costs that will be incurred in the process of commercialization, sales and distribution. The Company makes the appropriate valuation adjustments, recording impairment expense when the net realizable value of the inventories is less than their acquisition cost.
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| Property and equipment | Property and equipment Property and equipment is recognized and subsequently measured at cost less accumulated depreciation and any accumulated impairment losses, if any. When components of property and equipment have different useful lives they are accounted for separately. Depreciation is provided at rates which are calculated to write off the assets over their estimated useful lives as follows:
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| Intangible assets | Intangible assets Acquired intangible assets are initially measured at cost. Following the initial recognition, intangible assets are measured at cost less any accumulated amortization and any impairment losses. The useful lives of intangible assets are either definite or indefinite. Intangible assets that have a finite useful life are amortized over the assessed useful economic life and are assessed for impairment when there are any indicators present that the intangible asset may be impaired. The Company reviews the amortization period and method at least annually, and any changes are treated as changes in accounting estimates and applied prospectively. Computer application and webpage are amortized over estimated useful lives of three years and Software is amortized over estimated useful lives of five years. |
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| Deferred Offering Costs | Deferred Offering Costs Deferred offering costs represent legal, accounting and other direct costs related to the IPO, which will be completed on September 22, 2023. Upon the completion of IPO, direct offering costs of will be reclassified to additional paid-in capital along with underwriters’ fees paid, net against IPO proceeds received. The Company recorded €409,710 and € of deferred offering costs as a non-current asset in the accompanying balance sheets as of June 30, 2023 and December 31, 2022, respectively. (Note 16) |
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| Leases | Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the agreement on the inception date. As a lessee, the Company recognizes a lease obligation and a right-of-use asset in the statements of financial position on a present-value basis at the date when the leased asset is available for use. Each lease payment is apportioned between a finance charge and a reduction of the lease obligation. Finance charges are recognized in finance cost in the statements of income and comprehensive income. The right of-use assets are depreciated over the shorter of its estimated useful life and the lease term on a straight-line basis. Lease obligations are initially measured at the net present value of the following lease payments:
Lease payments are discounted using the interest rate implicit in the lease, or if this rate cannot be determined, the Company’s incremental borrowing rate. Right-of-use assets are initially measured at cost comprising the following:
Payments associated with short-term leases and leases of low-value assets are recognized on a straight- line basis as an expense in the statements of income and comprehensive income. Short-term leases are leases with a lease term of 12 months or less. |
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| Share capital | Share capital Ordinary shares are classified as equity, net of transaction costs directly attributable to the issue of ordinary shares. Ordinary shares issued for consideration other than cash are based on their market value at the date the ordinary shares are issued. |
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| Provisions | Provisions Provisions are recognized when there is a present legal or constructive obligation as a result of a past event, for which it is probable that a transfer of economic benefits will be required to settle the obligation, and where a reliable estimate can be made of the amount of the obligation. Provisions are discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability, if material. Where discounting is used, the increase in the provision due to passage of time (“accretion expense”) is recognize as an expense on the statements of income and comprehensive income. |
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| Foreign currency transactions | Foreign currency transactions The functional currency used by the Company is the euro. Consequently, operations in currencies other than the euro are considered to be denominated in foreign currency and are recorded at the exchange rates in force on the dates of the operations. At year-end, monetary assets and liabilities denominated in foreign currency are converted by applying the exchange rate on the balance sheet date. The profits or losses revealed are charged directly to the profit and loss account for the year in which they occur. On each balance sheet date, monetary assets and liabilities in foreign currency are converted at the rates in force on the closing date. Non-monetary items in foreign currency measured in terms of historical cost are converted at the exchange rate on the date of the transaction. The exchange differences of the monetary items that arise both when liquidating them and when converting them at the closing exchange rate, are recognized in the results of the year, except those that are part of the investment of a business abroad, which are recognized directly in equity net of taxes until the time of its disposal. |
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| Income per share | Income per share Basic income per share is calculated by dividing the income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding in the period. For all periods presented, the income attributable to ordinary shareholders equals the reported income attributable to owners of the Company. Diluted income per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of ordinary shares outstanding for the calculation of diluted income per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase ordinary shares at the average market price during the period.
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding, as of June 30, 2023 and December 31, 2022. |
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| Impairment of non-financial assets | Impairment of non-financial assets At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication that the carrying amount is not recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Management assesses impairment of non-financial assets such as property and equipment and intangible assets. In assessing impairment, management estimates the recoverable amount of each asset or cash generating unit (“CGU”) based on expected future cash flows. The Company has applied judgment in its assessment of the appropriateness of the determination of CGU’s. When measuring expected future cash flows, management makes assumptions about future growth of profits which relate to future events and circumstances. Actual results could vary from these estimated future cash flows. Estimation uncertainty relates to assumptions about future operating results and the application of an appropriate discount rate. |
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| Financial instruments | Financial instruments Financial assets Financial assets are classified as either financial assets at fair value through profit and loss (“FVTPL”), amortized cost, or fair value through other comprehensive income (“FVTOCI”). The Company determines the classification of its financial assets at initial recognition. Classification and measurement Classification determines how financial assets and financial liabilities are accounted for in financial statements and, in particular, how they are measured on an ongoing basis. IFRS 9 Financial Instruments approach for the classification of financial assets is driven by cash flow characteristics and the business model in which an asset is held. This single, principle-based approach replaces prior rule-based requirements. The model also results in a single impairment model being applied to all financial instruments. Financial assets at FVTPL Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of income and comprehensive income. Realized and unrealized gains and income arising from changes in the fair value of the financial asset held at FVTPL are included in the statements of income and comprehensive income in the period in which they arise. The Company has classified cash as FVTPL. Financial assets at FVTOCI Financial assets at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. There are no financial assets classified as FVTOCI. Financial assets at amortized cost Financial assets at amortized cost are initially recognized at fair value, net of transaction costs, and subsequently carried at amortized cost less any impairment. They are classified as current assets or non- current assets based on their maturity date. The Company has classified accounts receivable and amounts due from related parties at amortized cost. Financial assets are derecognized when they mature or are sold, and substantially all the risks and rewards of ownership have been transferred.
Financial liabilities Financial liabilities are classified as either financial liabilities at FVTPL or at amortized cost. The Company determines the classification of its financial liabilities at initial recognition. Financial liabilities are classified as measured at amortized cost, net of transaction costs unless classified as FVTPL. The Company’s accounts payable and accrued liabilities, amounts due to related parties, lease liabilities and bank loans are classified as measured at amortized cost. The Company’s bank loans were classified as measured at amortized cost at June 30, 2023 and December 31, 2022. During the six months ended June 30, 2023 and 2022, the Company incurred €138,109 and €66,572 interest on bank loans. |
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| Fair value measurement | Fair value measurement Fair value measurements are made using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value:
The fair value measurement is categorized in its entirety by reference to its lowest level of significant input. Fair value is based on estimated cash flows, discounted at interest rates for similar instruments. The carrying amounts shown of the Company’s financial instruments including cash, accounts receivable, inventories, accounts payable and accrued liabilities approximate their fair value (Level 1) due to the short-term maturities of these instruments. |
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| Impairment of financial assets | Impairment of financial assets The Company assesses at each statements of financial position date whether there is objective evidence that a financial asset or group of financial assets is impaired. The Company recognizes expected credit losses (“ECL”) for accounts receivable based on the simplified approach. The simplified approach to the recognition of expected losses does not require the Company to track the changes in credit risk; rather, the Company recognizes a loss allowance based on lifetime expected credit losses at each reporting date from the date of the account receivable. The Company measures expected credit loss by considering the risk of default over the contract period and incorporates forward-looking information into its measurement. ECLs are a probability-weighted estimate of credit losses. ECLs are measured as the difference in the present value of the contractual cash flows that are due to the Company under the contract, and the cash flows that the Company expects to receive. The Company assesses all information available, including past due status, and forward looking macro- economic factors in the measurement of the ECLs associated with its assets carried at amortized cost. The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.
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| New Accounting Pronouncements | New Accounting PronouncementsThe following accounting standards and amendments have been issued by the IASB or the International Financial Reporting Interpretations Committee that are not yet effective as of the date of the Company’s consolidated financial statements. The Company intends to adopt such standards upon the mandatory effective date.Classification of Liabilities as Current or Non-current (Amendments to IAS 1)The amendments to IAS1 provide a more general approach to the classification of liabilities based on the contractual arrangements in place at the reporting date. These amendments are effective for reporting periods beginning on or after January 1, 2023. The Company is evaluating the impact of the above amendments on its consolidated financial statements. |
Material Accounting Policies (Tables) |
6 Months Ended | |||||||||
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Jun. 30, 2023 | ||||||||||
| Material Accounting Policies [Abstract] | ||||||||||
| Schedule of Estimated Useful Lives | Depreciation is provided at rates which are calculated to write off the
assets over their estimated useful lives as follows:
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Accounts Receivable and Other Receivables (Tables) |
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Receivable and Other Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Receivable and Other Receivables | Accounts receivable and other receivables as of June 30, 2023 and December
31, 2022 are summarized as below:
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Prepaid Expense (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Prepaid Expense | Prepaid expense as of June 30, 2023 and December 31, 2022 are summarized
as below:
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Property and Equipment (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property and Equipment | Property and equipment as of June 30, 2023 and
December 31, 2022 are summarized as follows:
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Intangible Assets (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible Assets | Intangible assets as of June 30, 2023 and December 31, 2022 are summarized
as follows:
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Accounts Payable and Accrued Liabilities (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Payable and Accrued Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued labilities as of
June 30, 2023 and December 31, 2022 are summarized as follows:
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Related Party Transactions (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Schedule of due from related parties | Amount due from (to) as of June 30, 2023 are summarized
as follows:
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| Schedule of due to related parties | Due to related parties:
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| Schedule of Transactions with Related Parties | Transactions with related parties during the six months ended June
30, 2023 and 2022 were summarized as follows:
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Bank Loans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank Loans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Bank Loans | Bank loans as of June 30, 2023 and December 31,
2022 are summarized as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Terms and Conditions of Outstanding Bank Loans | The terms and conditions of outstanding bank
loans are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Principal Repayments to Maturity by Fiscal Year | Principal repayments to maturity by fiscal year
are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Company Maintains the Following Lines of Credit | the Company maintains the following
lines of credit
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Lease Obligations | As of June 30, 2023 and December 31, 2022, the
Company had the following lease obligations:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Lease Liabilities |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Maturity Lease Liabilities | The following table summarizes the maturity of
our lease liabilities as of June 30, 2023:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Right-Of-Use Assets | As of June 30, 2023 and December 31, 2022, the Company has right-of-use
assets as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments and Risk Management (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments and Risk Management [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Financial Instruments and Fair Value Measurement | Set out below are categories of financial instruments
and fair value measurements as of June 30, 2023 and December 31, 2022:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Offering Costs (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Offering Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Deferred Offering Costs | As of June 30, 2023 and December 31, 2022, the
Company incurred deferred offering costs from its Initial Public Offering as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Revenue by Geographical Markets | The Company’s sales derived from sales of
electrical and electronic material. The following is the Company’s revenue by geographical markets during the six months ended June
30, 2023 and 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Cost of Revenue |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selling and Administrative Expenses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling and Administrative Expenses[Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Selling and Administrative Expenses | The Company incurred the following selling and
administrative expenses during the six months ended June 30, 2023 and 2022.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||
| Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of Non-Cash Investing and Financing Activities | Non-cash investing and financing activities:
|
||||||||||||||||||||||||||||||||||||
Entity Information (Details) |
Nov. 08, 2022
EUR (€)
|
|---|---|
| Entity Information [Abstract] | |
| Ordinary share percentage | 100.00% |
| Consumption of electricity | € 2,250 |
Material Accounting Policies (Details) - EUR (€) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Material Accounting Policies [Abstract] | |||
| Revenue percentage | 11.70% | ||
| Cash | € 498,099 | € 502,585 | |
| Deferred offering cost | 409,710 | ||
| Interest on bank loan | € 138,109 | € 66,572 | |
| One Customer [Member] | |||
| Material Accounting Policies [Abstract] | |||
| Revenue percentage | 10.00% | 12.30% | |
| Insurance risk [member] | |||
| Material Accounting Policies [Abstract] | |||
| Cash | € 100,000 | ||
Material Accounting Policies (Details) - Schedule of Estimated Useful Lives |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Right-of-use assets [Member] | |
| Material Accounting Policies (Details) - Schedule of Estimated Useful Lives [Line Items] | |
| Estimated useful lives | Over term of lease |
| Furniture [Member] | |
| Material Accounting Policies (Details) - Schedule of Estimated Useful Lives [Line Items] | |
| Estimated useful lives | 10 years |
| Tools and machinery [Member] | |
| Material Accounting Policies (Details) - Schedule of Estimated Useful Lives [Line Items] | |
| Estimated useful lives | 4 years |
Accounts Receivable and Other Receivables (Details) - EUR (€) |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Accounts Receivable and Other Receivables [Abstract] | |||
| Allowance for doubtful accounts | € 338,062 | € 333,528 | |
| Bad debt expense | € 4,534 | ||
| Bad debt recovery | € 10,859 | ||
Accounts Receivable and Other Receivables (Details) - Schedule of Accounts Receivable and Other Receivables - EUR (€) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of Accounts Receivable and Other Receivables [Abstract] | ||
| Customers by sales provision of services | € 1,979,803 | € 3,429,596 |
| VAT receivable | 29,242 | |
| Others | 59,484 | 41,541 |
| Accounts receivable and other receivables gross | 2,068,529 | 3,471,137 |
| Allowance for doubtful accounts | (338,062) | (333,528) |
| Accounts receivable and other receivables net | € 1,730,467 | € 3,137,609 |
Inventories (Details) - EUR (€) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Inventories [Abstract] | |||
| Finished goods | € 8,742,895 | € 10,106,216 | |
| Inventory in the statements of operations | 0 | € 0 | |
| Provision for obsolescence | € 90,345 | € 90,345 | |
Prepaid Expense (Details) - EUR (€) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Prepaid Expenses [Line Items] | ||
| Purchase of inventory | € 884,768 | € 632,185 |
Prepaid Expense (Details) - Schedule of Prepaid Expense - EUR (€) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of Prepaid Expense [Abstract] | ||
| Advancement to suppliers for inventory | € 884,768 | € 632,185 |
| Advancement for PP&E under construction | 11,258 | 26,727 |
| Conference | 2,995 | 61,036 |
| Security deposits and others | 15,957 | 15,658 |
| Total | € 914,978 | € 735,606 |
Property and Equipment (Details) - EUR (€) |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Property and Equipment (Details) [Line Items] | |||
| Acquired property and equipment | € 159,764 | € 150,483 | |
| Depreciation of property and equipment | 10,051 | € 1,321 | |
| Property, Plant and Equipment [Member] | |||
| Property and Equipment (Details) [Line Items] | |||
| Acquired property and equipment | € 19,333 | € 2,565 | |
Property and Equipment (Details) - Schedule of Property and Equipment - EUR (€) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property and Equipment (Details) - Schedule of Property and Equipment [Line Items] | ||
| Property and equipment, gross | € 185,392 | € 166,060 |
| Accumulated depreciation | (25,628) | (15,577) |
| Property and equipment | 159,764 | 150,483 |
| Furniture [Member] | ||
| Property and Equipment (Details) - Schedule of Property and Equipment [Line Items] | ||
| Property and equipment, gross | 49,063 | 49,063 |
| Laboratory Photovoltaic Installation [Member] | ||
| Property and Equipment (Details) - Schedule of Property and Equipment [Line Items] | ||
| Property and equipment, gross | 116,912 | 98,792 |
| Tools and Machinery [Member] | ||
| Property and Equipment (Details) - Schedule of Property and Equipment [Line Items] | ||
| Property and equipment, gross | 6,026 | 5,458 |
| Computer [Member] | ||
| Property and Equipment (Details) - Schedule of Property and Equipment [Line Items] | ||
| Property and equipment, gross | € 13,391 | € 12,747 |
Intangible Assets (Details) - EUR (€) |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Intangible Assets (Details) [Line Items] | |||
| Intangible assets | € 561,698 | € 369,006 | |
| Software development | 338,120 | ||
| Amortization expense | 25,142 | € 429 | |
| Intangible Assets [Member] | |||
| Intangible Assets (Details) [Line Items] | |||
| Intangible assets | € 561,698 | € 369,005 | |
Intangible Assets (Details) - Schedule of Intangible Assets - EUR (€) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Intangible Assets (Details) - Schedule of Intangible Assets [Line Items] | ||
| Intangible Assets Gross | € 626,304 | € 408,470 |
| Accumulated amortization | (64,606) | (39,464) |
| Intangible Assets Net | 561,698 | 369,006 |
| Software Development [Member] | ||
| Intangible Assets (Details) - Schedule of Intangible Assets [Line Items] | ||
| Intangible Assets Gross | 338,120 | 368,705 |
| Software [Member] | ||
| Intangible Assets (Details) - Schedule of Intangible Assets [Line Items] | ||
| Intangible Assets Gross | 248,419 | |
| Computer Application [Member] | ||
| Intangible Assets (Details) - Schedule of Intangible Assets [Line Items] | ||
| Intangible Assets Gross | 33,755 | 33,755 |
| Web Page [Member] | ||
| Intangible Assets (Details) - Schedule of Intangible Assets [Line Items] | ||
| Intangible Assets Gross | € 6,010 | € 6,010 |
Accounts Payable and Accrued Liabilities (Details) - Schedule of Accounts Payable and Accrued Liabilities - EUR (€) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of Accounts Payable and Accrued Liabilities [Abstract] | ||
| Trade payable | € 2,096,225 | € 2,412,588 |
| VAT payable | 95,805 | 37,127 |
| Payroll taxes payable | 39,251 | 46,268 |
| Customer deposits | 156,886 | |
| Total | € 2,231,281 | € 2,652,869 |
Related Party Transactions (Details) - EUR (€) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Related Party Transactions [Abstract] | ||
| Due from related party | € 3,800,000 | |
| Term loan | 5 years | |
| Market interest rate | 6.25% | |
| Percentage of margin applied | 13.00% | |
| Incurred management fees | € 508,590 | € 142,433 |
Bank Loans (Details) - EUR (€) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Bank Loans (Details) [Line Items] | ||
| Bank loan interest expense | € 159,197 | € 132,861 |
| Unsecured bank loans | € 3,400,000 | |
| Interest payable average rate | 2.11% | |
| Interest expense from line of credit | € 133,977 | 61,357 |
| Bank Loan [Member] | ||
| Bank Loans (Details) [Line Items] | ||
| Bank loan interest expense | € 4,132 | € 5,215 |
Bank Loans (Details) - Schedule of Bank Loans - EUR (€) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Bank Loans (Details) - Schedule of Bank Loans [Line Items] | ||
| Total loan | € 3,844,731 | € 8,334,531 |
| less: current portion | (3,636,961) | (8,010,239) |
| Total bank loan | 207,770 | 324,292 |
| Bank Loans [Member] | ||
| Bank Loans (Details) - Schedule of Bank Loans [Line Items] | ||
| Total loan | 440,170 | 556,386 |
| Lines of Credit [Member] | ||
| Bank Loans (Details) - Schedule of Bank Loans [Line Items] | ||
| Total loan | € 3,404,561 | € 7,778,145 |
Bank Loans (Details) - Schedule of Principal Repayments to Maturity by Fiscal Year |
6 Months Ended |
|---|---|
|
Jun. 30, 2023
EUR (€)
| |
| Schedule of Principal Repayments to Maturity by Fiscal Year [Abstract] | |
| 2023 | € 114,157 |
| 2024 | 233,926 |
| 2025 | 92,087 |
| Thereafter | |
| Total | € 440,170 |
Share Capital (Details) |
12 Months Ended | |||
|---|---|---|---|---|
|
Dec. 31, 2022
EUR (€)
shares
|
Jun. 30, 2023
€ / shares
shares
|
Jun. 30, 2023
$ / shares
shares
|
Feb. 28, 2023
shares
|
|
| Share Capital [Line Items] | ||||
| Number of shares authorized | 50,085,700 | 50,085,700 | ||
| Par value per share (in Euro per share) | (per share) | € 0.05 | $ 5 | ||
| Issuance of ordinary shares | 5,000,000 | 5,000,000 | 2,504,285 | |
| Pre-stock split | 2,500,000 | |||
| Proceeds of issuances (in Euro) | € | € 2,500,000 | |||
| Ordinary shares,outstanding | 50,085,700 | |||
| Ordinary Shares [Member] | ||||
| Share Capital [Line Items] | ||||
| Issuance of ordinary shares | 50,000,000 | |||
Reserve (Details) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
|
Jun. 30, 2023
EUR (€)
|
Dec. 31, 2022
EUR (€)
|
Jun. 30, 2023
USD ($)
|
|
| Reserve (Details) [Line Items] | |||
| Percentage of legal reserve | 10.00% | ||
| Percentage of share capital | 20.00% | ||
| Percentage of exceed share capital | 20.00% | ||
| Legal reserve | € 857 | € 857 | |
| Other reserves | 1,411,846 | 383,268 | |
| Legal Reserves [Member] | |||
| Reserve (Details) [Line Items] | |||
| Reserve | $ | $ 1,411,846 | ||
| Other reserves [member] | |||
| Reserve (Details) [Line Items] | |||
| Reserve | 383,268 | ||
| Other reserves | € 1,410,989 | € 382,411 |
Leases (Details) - EUR (€) |
Nov. 15, 2022 |
Sep. 26, 2022 |
Jun. 01, 2022 |
Jan. 01, 2021 |
Sep. 08, 2020 |
|---|---|---|---|---|---|
| Leases [Abstract] | |||||
| Monthly lease payment | € 417 | € 420 | € 3,384 | € 827 | € 527 |
| Percentage of customer price index | 2.00% | 2.00% | |||
| Lease agreement term | 3 years |
Leases (Details) - Schedule of Lease Obligations - EUR (€) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2023 |
|
| Schedule of Lease Obligations [Abstract] | ||
| Current lease | € 55,961 | € 53,382 |
| Non current lease | 39,098 | 13,998 |
| Total lease | € 95,059 | € 67,380 |
| Bottom of range [Member] | ||
| Schedule of Lease Obligations [Abstract] | ||
| Discount Rate | 1.50% | |
| Maturity | 2024 years | |
| Top of range [Member] | ||
| Schedule of Lease Obligations [Abstract] | ||
| Discount Rate | 3.00% | |
| Maturity | 2025 years |
Leases (Details) - Schedule of Lease Liabilities - EUR (€) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Schedule of Lease Liabilities [Abstract] | ||
| Balance | € 95,059 | € 56,743 |
| Lease liability additions | 109,506 | |
| Lease liability termination | (35,668) | |
| Repayment of Lease liability | (28,553) | (37,036) |
| Interest expense on lease liabilities | 874 | 1,514 |
| Balance | € 67,380 | € 95,059 |
Leases (Details) - Schedule of Maturity Lease Liabilities - EUR (€) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Schedule of Maturity Lease Liabilities [Abstract] | ||
| 2023 | € 28,891 | |
| 2024 | 31,636 | |
| 2025 | 8,072 | |
| Total lease payments | 68,599 | |
| Less: financing cost | (1,219) | |
| Lease liabilities | € 67,380 | € 95,059 |
Leases (Details) - Schedule of Right-Of-Use Assets - EUR (€) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Schedule of Right-Of-Use Assets [Abstract] | |||
| Balance | € 94,106 | € 55,730 | € 55,730 |
| Additions | 27,957 | € 7,944 | 109,506 |
| Termination | (34,777) | ||
| Depreciation | (27,957) | (36,353) | |
| Balance | € 66,149 | € 94,106 | |
Financial Instruments and Risk Management (Details) - One Customer [Member] |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Financial Instruments and Risk Management (Details) [Line Items] | ||
| Outstanding exceed percentage | 10.00% | |
| Company’s revenue | 13.00% | 161.00% |
Financial Instruments and Risk Management (Details) - Schedule of Financial Instruments and Fair Value Measurement - Financial Assets at Fair Value [Member] - EUR (€) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Financial Instruments and Risk Management (Details) - Schedule of Financial Instruments and Fair Value Measurement [Line Items] | ||
| Cash | € 498,099 | € 502,585 |
| Financial assets at amortized cost | ||
| Accounts receivable and other receivables | 1,730,467 | 3,137,609 |
| Amount due from related parties | 79,835 | 140,264 |
| Financial liabilities at amortized cost | ||
| Accounts payable and accrued liabilities | (2,231,281) | (2,652,868) |
| Amount due to related parties | (3,801,385) | (237,285) |
| Lease liabilities | (67,380) | (95,059) |
| Bank loans | (3,844,731) | (8,334,530) |
| Total fair value | € (7,636,376) | € (7,539,284) |
Revenue (Details) - EUR (€) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Revenue [Line Items] | ||
| Recognized revenue | € 7,211,916 | € 14,334,042 |
| Revenue - related parties | 184,362 | 544,786 |
| Electronic Market [Member] | ||
| Revenue [Line Items] | ||
| Recognized revenue | € 7,211,916 | € 14,334,042 |
Revenue (Details) - Schedule of Revenue by Geographical Markets - EUR (€) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Schedule of Revenue by Geographical Markets [Line Items] | ||
| Total revenue by geographical markets | € 7,211,916 | € 14,334,042 |
| Spain [Member] | ||
| Schedule of Revenue by Geographical Markets [Line Items] | ||
| Total revenue by geographical markets | 5,847,800 | 12,760,655 |
| Europe [Member] | ||
| Schedule of Revenue by Geographical Markets [Line Items] | ||
| Total revenue by geographical markets | 1,083,065 | 1,369,875 |
| Rest of the world [Member] | ||
| Schedule of Revenue by Geographical Markets [Line Items] | ||
| Total revenue by geographical markets | € 281,051 | € 203,512 |
Cost of Revenue (Details) - EUR (€) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Cost of Revenue [Line Items] | ||
| Cost of sales | € 6,013,713 | € 12,004,439 |
| Related Parties [Member] | ||
| Cost of Revenue [Line Items] | ||
| Cost of sales | 12,004,439 | |
| Cost of revenue derived from related parties | € 0 | € 30,696 |
Cost of Revenue (Details) - Schedule of Cost of Revenue - EUR (€) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Schedule of Cost of Revenue [Abstract] | ||
| Purchase of finished goods | € 6,012,282 | € 12,004,042 |
| Purchase of raw materials | 927 | 294 |
| Outsourcing service | 504 | 103 |
| Total | € 6,013,713 | € 12,004,439 |
Selling and Administrative Expenses (Details) - EUR (€) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Selling and Administrative Expenses (Details) [Line Items] | ||
| Selling and administrative expenses | € 1,236,919 | € 902,607 |
| Selling and administrative expenses related party | 508,590 | 142,433 |
| Selling, general and administrative expense [member] | ||
| Selling and Administrative Expenses (Details) [Line Items] | ||
| Selling and administrative expenses | € 1,236,919 | € 902,607 |
Selling and Administrative Expenses (Details) - Schedule of Selling and Administrative Expenses - EUR (€) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Schedule of Selling And Administrative Expenses [Abstract] | |||
| Professional fees | € 566,062 | € 484,029 | |
| Shipping and handling expenses | 148,720 | 183,546 | |
| Warehouse handling | 44,539 | 48,731 | |
| Miscellaneous operating expenses | 45,594 | 21,622 | |
| Marketing and advertising | 242,940 | 74,267 | |
| Leases and royalties | 66,409 | 54,116 | |
| Insurance premiums | 38,167 | 9,954 | |
| Repair and conservation | 19,831 | 16,418 | |
| Supplies | 1,506 | 230 | |
| Amortization of property and equipment | 35,194 | 1,750 | |
| Amortization of right-of-use assets | 27,957 | 7,944 | € 109,506 |
| Total | € 1,236,919 | € 902,607 | |
Supplemental Cash Flow Information (Details) - EUR (€) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Supplemental Cash Flow Information [Abstract] | ||
| Paid interest | € 158,321 | € 131,282 |
| Income taxes | € 0 | € 233,927 |
Supplemental Cash Flow Information (Details) - Schedule of Non-Cash Investing and Financing Activities - EUR (€) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Schedule of Non-Cash Investing and Financing Activities [Abstract] | ||
| Reallocation of opening deficit to reserve | € (1,028,578) | € (267,222) |
Subsequent Events (Details) |
Jun. 30, 2023
€ / shares
|
Jun. 30, 2023
USD ($)
$ / shares
shares
|
Feb. 28, 2023
shares
|
|---|---|---|---|
| Subsequent events [Abstract] | |||
| American depositary shares | 1,000,000 | ||
| Ordinary shares | 5,000,000 | 2,504,285 | |
| Price per share (in Dollars per share) | (per share) | € 0.05 | $ 5 | |
| Gross proceeds (in Dollars) | $ | $ 5,000,000 |