FTC Solar, Inc.

At June 30, 2025, we had long-term Senior Notes outstanding, inclusive of paid-in-kind interest, totaling $16.1 million in accumulated principal. In connection with the initial issuance of these Senior Notes in December 2024, we also issued warrants to the institutional investor in the Notes (the "Investor") for 1,750,000 shares of our common stock (the "Original Warrants"). The Investor exercised the Original Warrants in full on June 30, 2025 and received 1,750,000 shares of our common stock in return.

As described above, on July 2, 2025, we entered into a Credit Agreement with the Lenders, including the Investor, for a senior secured term facility of up to $75 million and obtained $14.3 million principal amount of Initial Term Loans from the Lenders maturing on July 2, 2029, receiving proceeds, net of fees and expenses, of approximately $13.0 million. As consideration for the transaction under the Credit Agreement, we also issued warrants to the Lenders to purchase up to an aggregate of 5,418,292 shares of our common stock at an exercise price of $0.01 per share (together with the Amendment Warrants (defined below), collectively, the "New Warrants"). A total of 6,836,237 shares of common stock are issuable upon exercise of the New Warrants, subject to the terms of the New Warrants. The New Warrants are exercisable from time to time in accordance with their terms for either a cash payment equal to the exercise price or on a cashless exercise basis until or prior to 11:59 p.m., New York time, on July 2, 2035. Exercise of the New Warrants are subject to certain exercise caps that limit the number of shares of our common stock issuable under the New Warrants, in the aggregate, to less than 20% of our common stock outstanding on the date the New Warrants were issued, unless stockholder approval is otherwise obtained under applicable Nasdaq rules. We have filed definitive proxy materials for a special meeting of stockholders to be held during the third quarter of 2025 to seek such approval.

Under the Credit Agreement, subject to Company stockholder approval of the issuance of all of the shares of the Company's common stock issuable upon the full exercise of the New Warrants issued, we can obtain an additional $23.2 million principal amount of First Delayed Draw Term Loans from the Lenders under the Credit Agreement. We have filed definitive proxy materials for a special meeting of stockholders to be held during the third quarter of 2025 to seek such approval.

Also, under the Credit Agreement, assuming stockholder approval was obtained as described above, up to $37.5 million principal amount of Second Delayed Draw Term Loans may also be requested by the Company, subject to approval by the Lenders in their sole discretion.

Outstanding obligations under the Credit Agreement are secured by a first priority lien on substantially all tangible and intangible property of the Company and the guarantors and pledges of the equity of certain Company subsidiaries, in each case subject to certain exceptions, limitations and exclusions for the collateral.

In connection with the Credit Agreement, the Investor entered into a Subordination Agreement, dated July 2, 2025 (the “Subordination Agreement”). Pursuant to the Subordination Agreement, the Investor agreed to the subordination of all indebtedness owed by the Company to the Investor, including under the Senior Notes issued by the Company to the Investor on December 4, 2024, to the indebtedness and obligations owed under the Credit Agreement and the other applicable loan documents.

Also, in connection with the Credit Agreement and the Subordination Agreement, the Company and Investor entered into an Amended and Restated Promissory Note, dated July 2, 2025 (the “A&R Promissory Note”). The A&R Promissory Note amends and restates the original Senior Notes to remove the seniority terms of those notes, conform the original Senior Notes to the terms of the Credit Agreement and the Subordination Agreement, amend certain prepayment and make-whole terms under the original Senior Notes, delete certain covenants and event of default terms, reduce the interest rate under the original Senior Notes to 5% per annum paid in cash and 7% per annum paid in kind, and to delete the financial covenants set forth in the original Senior Notes. As a result of an amendment to the Purchase Agreement entered into on July 2, 2025 (the "Purchase Agreement Amendment"), among other things, the Investor agreed to release all liens and guarantees securing the obligations under the Senior Notes, the Purchase Agreement, and the A&R Promissory Note.

In consideration for the Investor's agreements under the A&R Promissory Note, the Subordination Agreement, and the Purchase Agreement Amendment, the Investor received 1,417,945 warrants with a term of 10 years, to purchase our common stock at an exercise price of $0.01 per share (the "Amendment Warrants").

Statements of cash flows

The following table shows our cash flows from operating activities, investing activities and financing activities for the stated periods:

Operating activities

During the six months ended June 30, 2025, we used approximately $13.4 million of cash to fund a portion of our current period expenditures for personnel and facilities, legal and professional fees, insurance, research and development and various other operating activities. This compares to approximately $17.1 million of cash used during the six months ended June 30, 2024, also to fund a portion of our prior period expenditures for various operating activities as described above.

During the six months ended June 30, 2025 and 2024, we generated approximately $2.7 million and $1.5 million of cash, respectively, primarily from working capital reductions, including timing of customer receipts and vendor payments.

Our working capital decreased by approximately $17.4 million from almost $27.1 million at December 31, 2024 to $9.7 million at June 30, 2025. The decrease was largely attributable to (i) the use of cash to fund current period expenditures as described above and (ii) the impact of higher activity levels on various components of working capital during the six months ended June 30, 2025.

Investing activities

During the six months ended June 30, 2025, we received a $3.2 million contingent earnout payment in connection with the June 2021 sale of our equity interest in Dimension, as well as a small earnout payment from the sale of our Atlas software platform in 2024. We also had capital expenditures of approximately $0.3 million, primarily for tooling.

During the six months ended June 30, 2024, we received $4.1 million of contingent earnout payments from Dimension. We also made an additional equity investment of $1.8 million in Alpha Steel and spent nearly $1.1 million, mainly for tooling and new computer and IT equipment.

Financing activities

During the six months ended June 30, 2025 and 2024, we received a minimal amount of proceeds from employee exercises of stock options during each period.

Critical Accounting Policies and Significant Management Estimates

Preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenue and expenses during the period. Estimates are used for calculating the measure of progress of our solar tracker projects and deriving the standalone selling prices of the individual performance obligations when determining amounts to recognize for revenue, estimating allowances for credit losses and slow-moving and obsolete inventory, determining useful lives of long-lived assets and the estimated fair value of those assets for impairment assessments, and estimating the fair value of investments, warrants, stock compensation awards, warranty liabilities and federal and state taxes, including tax valuation allowances, as well as other contingencies. We base our estimates on historical experience and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates due to risks and uncertainties.

To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

We believe that the accounting policies described below involve a significant degree of judgment and complexity. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our condensed consolidated financial condition and results of operations.

Revenue recognition

Our accounting policy onrevenue recognition may be found in Note 2, "Summary of significant accounting policies" in our Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report.

The timing and amounts of revenue and cost of revenue recognition, as well as recording of related receivables and deferred revenue, is highly dependent on our identification of performance obligations in each contract and our estimates by contract of total project cost and our progress toward project completion as of each period end. Certain estimates are subject to factors outside of our control that may impact our suppliers and the global supply chain. As an example, we began to experience increases in steel prices and shipping and logistics costs, as well as delays in delivery of our products to customers during 2021, which negatively impacted our results of operations as we were not able to recover all of the additional costs under certain of our fixed fee contracts. In addition, regulatory, tariff and import concerns such as those caused by the UFLPA and the Solar Circumvention Investigation have in the past, and may continue to, affect our ability to obtain project materials and may delay the timing of customer project activity which has had in the past, and may continue to have, an adverse impact on our results of operations, including the expected timing of the recognition of revenue needed to cover our relatively fixed overhead costs. We base our estimates on the best information available at each period end, but future events and their effects cannot be determined with certainty, and actual results could differ materially from our assumptions and estimates.

Accounts receivable, net

Our accounting policy relating to ouraccounts receivable and allowance for credit losses may be found in Note 2, "Summary of significant accounting policies" in our Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report.

The allowance for credit losses is based on the lifetime expected credit loss of our customer accounts. To assess the lifetime expected credit loss, we utilize a loss rate method that takes into consideration historical experience and certain other factors, as appropriate, such as credit quality, current economic or other conditions and changes in project status that may affect a customer's ability to pay. This method accelerates the recognition of expected credit losses as compared to the incurred loss model used prior to 2023 and may result in material differences between our estimates and actual collection results. We may also have greater fluctuations in our credit loss expense over time based on changes in our historical experience or changes in estimates of future economic conditions which may not adequately reflect future actual customer payment activity.

Adjustments to the allowance are largely dependent on historical experience involving amounts previously collected from our customers in recent years or based on specific changes in a customer's ability to pay. As an example, during the six months ended June 30, 2025, we recognized additional credit loss provisions of $0.2 million compared to $0.6 million recognized during the six months ended

June 30, 2024, with the change primarily related to our assessments in both 2025 and 2024 as to the ability by certain specific customers to fully pay contractual amounts owed us. Historical experience, when used in making such adjustments, may not reflect current actual experience.

Warranty

Our accounting policy relating to ourwarranty obligations may be found in Note 2, "Summary of significant accounting policies" in our Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report.

We base our estimated warranty obligations on available industry data relating to the nature and frequency of product failure rates and, where possible, on our historical experience, to make estimates of costs to address future claims. These estimates are inherently uncertain given our relatively short history of sales, and changes to our historical or projected warranty experience or fluctuations in available industry data may result in material changes to our warranty reserves in the future. Additionally, we make estimates of what costs we believe will be recoverable from the manufacturers of our products that we use to offset our obligations to our customers.

While we periodically monitor our warranty activities and claims, if actual costs incurred were to be different from our estimates, we would recognize adjustments to our warranty reserves in the period in which those differences arise or are identified. Such adjustments could be material to the cost of revenue in our results of operations in the period the adjustments are made.

Stock-based compensation and warrants

Our accounting policies relating to ourstock-based compensation and our outstanding Warrants may be found in Note 2, "Summary of significant accounting policies" in our Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report.

The Black-Scholes model and Monte Carlo simulations rely on various assumptions, in addition to the exercise price of an option award or our Warrants and the value of our common stock on the date of grant. These assumptions include:

Expected Term: The expected term represents the period that the Company’s stock-based awards and Warrants are expected to be outstanding and is calculated for option grants as the average of the option vesting and contractual terms, based on the simplified method, as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for options granted. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. The contractual life of an option may be up to 10 years. Monte Carlo simulations, as described below, estimate the derived service period of awards with market conditions.

Expected Volatility: Since the Company did not have a trading history of its common stock prior to our IPO and since such trading history subsequent to our IPO is limited and may be less than the expected term of an award or our Warrants, the expected volatility is derived from a weighted average of (i) our historical volatility over our entire trading history, with respect to certain more recent awards, and (ii) the average historical stock volatilities of several public companies within the Company’s industry that it considers to be comparable to its business over a period equivalent to the expected term of the stock option grants, or awards granted with market conditions.

Risk-Free-Interest-Rate: The Company bases the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term or derived service or performance period.

Expected Dividend: The Company has not issued any dividends in its history and does not expect to issue dividends over the life of option grants or awards with market conditions and, therefore, has estimated the dividend yield to be zero.

We used Monte Carlo simulations for certain awards granted with market conditions which provided an estimated average present value for each award based on a simulation assuming Geometric Brownian Motion in a risk-neutral framework using up to 250,000 simulation paths to determine the derived service and vesting periods.

Our use of the simplified method for estimating the expected outstanding term of our options may differ significantly from future actual exercise patterns of our option holders. Estimates of the outstanding terms of our options, which are less than the actual exercise patterns of our option holders, may result in lower recognized expense. Alternatively, our recognized expense may be higher if our option holders exercise their options sooner than our estimates project.

Similarly, our use of a volatility estimate based on historical stock volatilities of a peer group of other public companies may differ significantly from the actual future volatility of our stock over the term our Warrants and our options or awards with market conditions are held. Higher estimated volatility compared to future actual results may result in higher recognized expense or fair value of our Warrants and alternatively, lower expected volatility compared to future actual results may result in lower recognized expense or fair value of our Warrants.

Changes to any of our assumptions, but particularly our estimates of expected term or derived service period and volatility, could change the fair value of our Warrants, as well as our options or awards with market conditions which could impact the amount of stock-based compensation expense we report each period. Changes in the trading price of our common stock on Nasdaq could also have a significant impact on the fair value of our Warrants, as well as whether awards with market conditions are ultimately earned.

Impairment

Our accounting policies relating toimpairment of our long-lived assets held for use and ofgoodwill may be found in Note 2, "Summary of significant accounting policies" in our Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report.

Key judgments and assumptions involving our assessment of impairment of our long-lived assets, as well as goodwill, may include:

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Determination of whether events or changes in circumstances indicate that the carrying value of our long-lived assets or goodwill might be impaired. Such factors to consider may include an evaluation of changes in the business or regulatory climate, market conditions or other events impacting our operations;

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Estimating future cash flows of our long-lived assets or asset groups, which may involve assumptions as to the lowest level of our assets at which cash flows are generated, including future growth and risk-adjusted discount rates, as well as a terminal growth rate or value and future market conditions;

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Estimates of assumptions a market participant would use in determining the fair value of the affected long-lived assets or asset groups; and

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Estimating the fair value of the consolidated company.

In estimating the fair value of the consolidated company, we used our market capitalization based on our closing stock price on the Nasdaq Capital Market at June 30, 2025. Our daily closing stock price is affected by numerous factors, some of which may not directly involve the operations of the company and, historically, has demonstrated high volatility.

We did not identify any impairments of our long-lived assets or goodwill during the six months ended June 30, 2025 and 2024.

JOBS Act accounting election

We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We elected to use the allowed extended transition period for adopting new or revised accounting standards.

Non-GAAP Financial Measures

Adjusted EBITDA, adjusted net loss and adjusted earnings per share ("EPS")

We utilize Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS as supplemental measures of our performance. We define Adjusted EBITDA as net loss plus (i) provision for (benefit from) income taxes, (ii) interest expense, less interest income, (iii) depreciation expense, (iv) amortization of intangibles, (v) stock-based compensation, (vi) loss from changes in the fair value of our warrant liability, and (vii) Chief Executive Officer ("CEO") transition costs, non-routine legal fees, costs associated with our Reverse Stock Split, severance and certain other costs (credits). We also deduct the contingent gains arising from earnout payments and project escrow releases relating to the disposal of our investment in an unconsolidated subsidiary and gains from changes in fair value of our warrant liability from net loss in arriving at Adjusted EBITDA. We define Adjusted Net Loss as net loss plus (i) amortization of debt discount and issue costs and intangibles, (ii) stock-based compensation, (iii) loss from changes in the fair value of our warrant liability, (iv) CEO transition costs, non-routine legal fees, costs associated with our Reverse Stock Split, severance and certain other costs (credits), and (v) the income tax expense (benefit) of those adjustments, if any. We also deduct the contingent gains arising from earnout payments and project escrow releases relating to the disposal of our investment in an unconsolidated subsidiary and gains from changes in fair value of our warrant liability in arriving at Adjusted Net Loss. Adjusted EPS is defined as Adjusted Net Loss on a per share basis using our weighted average diluted shares outstanding.

Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, U.S. GAAP. We present Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS, because we believe they assist investors and analysts in comparing our performance across reporting periods on an ongoing basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS to evaluate the effectiveness of our business strategies.

Among other limitations, Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS do not reflect (i) our cash expenditures, or future requirements, for capital expenditures or contractual commitments, and (ii) the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations. Further, the adjustments noted in Adjusted EBITDA do not reflect the impact of any income tax expense or benefit. Additionally, other companies in our industry may calculate Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS differently than we do, which limits its usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS should not be considered in isolation or as substitutes for performance measures calculated in accordance with U.S. GAAP, and you should not rely on any single financial measure to evaluate our business. These non-GAAP financial measures, when presented, are reconciled to the most closely applicable U.S. GAAP measure as disclosed below for the three and six months ended June 30, 2025 and 2024: